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Stock Option Tax Break Saved Fortune 500 over $27 Billion in 3 Years

Stock Option Tax Break Saved Fortune 500 over $27 Billion in 3 Years
30 Apr 2013

Full article first published in Accounting Today

Last week, at the Taxand Global Conference in New York, a high-ranking Treasury Department official discussed the growing controversy in the United Kingdom and other European countries over accusations of tax avoidance by Starbucks, Google, Amazon and other U.S.-based multinationals. Starbucks recently agreed to pay about 10 million pounds (or about $16 million) a year in taxes after coming under criticism for paying little in taxes last year, despite earning 398 million pounds in sales from its 700-plus stores in the U.K. The company only paid about 8.6 million pounds (or about $13.8 million) for the 14 years it has been doing business in the U.K. In part, Starbucks was able to lower its tax bill by shifting royalty payments to a unit in the Netherlands, The New York Times reported.

At the Taxand conference, Robert Stack, deputy secretary for international tax policy in the Treasury Department's Office of Tax Policy, noted, "Starbucks is a complicated question." He pointed out that U.K. Secretary of Business Vince Cable had looked into the matter and found that Starbucks wasn't making a large profit in the U.K.

However, Stack later acknowledged that it was important for the tax authorities to create regulations that can be fairly implemented. "I think that the onus is on us to write the rules that companies can live by and then companies can apply them," he said.

This article is based on the Global Tax Trends Plenary session at the Taxand Global Conference 2013: view the plenary film and media commentary here.
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