Will Starbucks Succeed in Securing New U.S. Tax Breaks?

by Frank L. Brunetti on June 14, 2013

Starbucks Corporation and roughly a dozen other large conglomerates are taking individual appeals to lawmakers in the hopes of overhauling current tax law policies and expanding certain tax breaks, a new analysis reveals.

tax_breaksThe Financial Times reports that the popular coffee chain, which maintains a global presence, reached out to lawmakers who are considering making changes to the U.S. Tax Code. The corporation proposed forgoing certain U.S. tax breaks, such as the domestic manufacturing deduction and accelerated depreciation for business investments, so long as its revenues could be used to lower the corporate tax rate. The company also requested that taxes on royalty revenues be deferred until the money is brought back into the United States. Under the current laws, deferral is permitted only for international royalty payments coming in from unrelated franchisees, but not related parties associated with the company, the Times explains.

"Reform that provides consistent treatment of active royalties received from both unrelated parties and related parties ... would be good tax policy, would increase Starbucks' ability to compete in markets outside the US and would facilitate further growth of our company," Brian Ugai, Starbucks vice president for tax and customs, tells the Financial Times.

While it is unclear how lawmakers will treat the proposals, the Huffington Post notes that Starbucks is not the only large company lobbying for more favorable tax treatment from the Internal Revenue Service.

Other large conglomerates - including Apple, Microsoft, Honeywell, and Walt Disney - are also appealing to lawmakers and seeking out substantial tax breaks without facing the risk of noncompliance allegations. For example, Disney agreed to give up its rights to certain tax breaks if lawmakers would consider expanding certain tax benefits for new intellectual property in the U.S.

Although lawmakers are discussing several solutions for simplifying the tax code for corporations and helping the comply with U.S. laws, no concrete resolutions have been reached.

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