Starbucks likely avoided taxes on $1.3 billion in profit using a Swiss subsidiary, a new report finds

Core Insights - A report indicates that Starbucks Coffee Trading Company (SCTC), a subsidiary in Switzerland, has significantly influenced Starbucks' tax payments over the past decade, helping to shift approximately $1.3 billion in profits to lower-tax jurisdictions since 2015 [2][10] - The report highlights a contrast between Starbucks' public image of social responsibility and its use of tax strategies that exploit loopholes [3][10] Tax Strategy and Financial Practices - SCTC is responsible for sourcing unroasted coffee and has been used to book the costs of these beans, which do not physically pass through Switzerland, allowing Starbucks to mark up prices significantly [4][5] - The markup on coffee beans increased from about 3$125 million and $150 million in dividends annually to another subsidiary, Starbucks Coffee EMEA B.V., with these payments not being taxed upon leaving Switzerland or entering the Netherlands [7] - The report analyzed financial filings of Starbucks subsidiaries across Europe to trace profits booked at SCTC [7] Company Response and Industry Context - Starbucks responded to the report by asserting that it pays appropriate taxes in all jurisdictions and that the report misrepresents its business model [8] - The use of offshore tax strategies is not unique to Starbucks, as many large companies utilize tax havens to minimize tax obligations, a practice that has been ongoing for decades [11][12]