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Originally published June 24, 2013 at 4:41 PM | Page modified June 25, 2013 at 7:19 AM

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Starbucks pays British tax to curb backlash

The payments come amid criticism levied at the company by British lawmakers and activist groups such as U.K. Uncut over complex accounting methods used to minimize Starbucks’ British tax burden.

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Starbucks said it will pay $15.4 million of corporation tax in the United Kingdom this year and in 2014 in response to criticism of its money-losing British business.

The Seattle-based coffee company has paid $7.7 million already and will pay the same amount later this year after forgoing unspecified tax deductions, according to an emailed statement. Starbucks will also pay $15.4 million of tax next year.

The payments come amid criticism levied at the company by British lawmakers and activist groups such as U.K. Uncut over complex accounting methods used to minimize its British tax burden.

At this year’s World Economic Forum, British Prime Minister David Cameron said companies need to “wake up and smell the coffee” on the issue, and tax avoidance was discussed at this month’s Group of Eight summit in Northern Ireland. Politicians have also grilled executives at Google and Amazon.com.

Starbucks said it will close or relocate unprofitable stores, and rely more on franchised or licensed stores rather than company-owned locations to become profitable in Britain.

“Six months ago, we felt that our customers should not have to wait for us to become profitable before we started paying U.K. corporation tax,” the company said in the statement. “We listened to our customers in December and so decided to forgo certain deductions which would make us liable to pay 10 million pounds in corporation tax this year and a further 10 million pounds in 2014.”

Starbucks, which has more than 700 stores in the Britain and more than 18,000 worldwide, said in December that it would pay “a significant amount” of British tax in 2013 and 2014. There has been no suggestion that Starbucks has broken any law.

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