Tax Anti-avoidance Through Transfer Pricing: The Case of Starbucks U.K.

Christian Plesner Rossing, Thomas Riise Johansen, Thomas C. Pearson

Research output: Chapter in Book/Report/Conference proceedingConference abstract in proceedingsResearchpeer-review

Abstract

This paper examines the case of Starbucks’ UK branch, which became subject to massive public criticism over alleged tax avoidance. Despite Starbucks arguing that its transfer pricing practices were in full compliance with regulatory requirements, public pressure for higher corporate tax payments led Starbucks to increase its UK tax payment on transfer pricing income beyond regulatory requirements. This case study suggests that MNE tax behavior on international transfer pricing is not strictly a matter of compliance with formal tax regulation. We demonstrate the way an MNE attempts to re-establish its ‘corporate social license’ with technically legitimate arguments of appropriate transfer pricing and, when such arguments fail to moderate social pressures, an MNE may experiment with voluntary responses. The case implies that MNEs can no longer treat transfer pricing as a technical regulation-driven discipline to be dealt with by accounting and tax experts. Instead, MNEs face the task of establishing a complex fit with their environment beyond the typical stakeholders with transfer pricing, i.e. tax authorities. These include government officials, tax activists, and consumers who voice their dissatisfaction with MNE corporate tax results in the public domain.
Original languageEnglish
Title of host publicationTwenty-Eighth Asian-Pacific Conference on International Accounting Issues : Program & Proceedings
Place of PublicationFresno
PublisherAsian-Pacific Conference
Publication date2016
Pages98
Publication statusPublished - 2016
Event28th Asian-Pacific Conference on International Accounting Issues - Maui, Hawaii, United States
Duration: 6 Nov 20169 Nov 2016
Conference number: 28
http://www.apconference.org/28th-asian-pacific-conference/

Conference

Conference28th Asian-Pacific Conference on International Accounting Issues
Number28
CountryUnited States
CityMaui, Hawaii
Period06/11/201609/11/2016
Internet address
SeriesProceedings of the Asian-Pacific Conference on International Accounting Issues
Volume28
ISSN2471-7266

Cite this