US coffee chain has only paid $14m in corporation tax in UK since 1998, and nothing in past three years, probe finds.

Coffee giant Starbucks has reportedly only paid $14m in corporation tax in the UK since 1998, and nothing in the past three years, despite racking up sales of more than $4.8bn.

A four-month investigation by news agency Reuters found that overall the firm had paid less than one per cent in corporation tax.

The coffee chain defended its actions, saying it had paid the appropriate level of tax.

In a written response, the US company said: “We have paid and will continue to pay our fair share of taxes in full compliance with all UK tax laws, as we always have.

“There has been no suggestion by any authority that we are anything but compliant and good tax payers.

“We do this in a way that is consistent with the values that have guided us since we were founded more than 40 years ago: balancing our need to operate a profitable business with a social conscience.”

Starbucks said it was committed to the UK and pointed out that it plans to create 5,000 new jobs over the next five years.

‘Clearly wrong’

The group’s overall tax rate, including deferred taxes which may or may not be paid in the future, was 31 per cent last year, much higher than the 18.5 percent average rate that campaign group Citizens for Tax Justice says large US corporations paid in recent years.

But on overseas income, Starbucks paid an average tax rate of 13 per cent, one of the lowest in the consumer goods sector.

Overall, the tax rate globally last year was much higher than average at 31 per cent, but on overseas income, Starbucks paid an average tax rate of 13 per cent, one of the lowest in the consumer goods sector.

Speaking to Al Jazeera, campaigner Richard Murphy, from Tax Research UK, who was consulted by the Reuters team as part of its investigation, said: “When we have a tax system that lets very large companies like Starbucks be on our High Street and pay no tax, and are competing with small, locally owned businesses, who are paying tax on all their profits, then there’s something very clearly wrong with our tax system.”

Starbucks is not alone in facing criticism for its low tax bill.

In April, a report in the Guardian newspaper said that online retailer Amazon had generated sales of more than $12.2bn in the UK over the past three years but had not paid any corporation tax on the profits from those sales.