Coffee chain Starbucks, which has come under fire for its approach to UK corporation tax, is seeking new tax breaks in the US.

In a letter to the US House of Representatives ways and means committee, which is investigating the first major overhaul of the tax code since 1986, Starbucks says it supports a territorial tax system which would exempt profits made outside US borders from some or all US corporate income tax. It also wants cuts in the rate of corporate tax, which is currently 35%.

Brian Ugai, Starbucks' vice president, tax and customs, says in the letter that the company's global effective tax rate exceeds 32%. He argues that 'a lower marginal corporate tax rate coupled with a territorial system would allow US companies, like ours, to expand their domestic and international presence and sales as well as create jobs in the US.

The letter goes on to say: 'A territorial system that does not subject foreign active trade or business income to US taxation will allow US companies like Starbucks to compete with local competitors on a level playing field, paying the same taxes that they pay.'

Starbucks said it supported the committee's review of tax provisions that have benefited the company such as the domestic manufacturing deduction and accelerated depreciation 'as long as it is done in a fair and comprehensive way'.

But the company wants to see changes to the way in which royalties earned overseas are taxed, claiming that the current rules favour active royalties received from an unrelated franchisee over similar active royalties received from a related franchisee.

In addition, Starbucks also wants the 'agriculture commodity exception', which applies to foreign income from the procurement and sale of coffee beans, retained in any new US tax rules, as this allows the company to 'purchase the highest quality beans competitively and ethically in the global coffee marketplace'.

Starbucks says that a lower US tax rate on intangible income should apply to the income earned in the US from foreign licensees who pay royalties in exchange for the right to use intangibles outside the country. To avoid double taxation, the company wants foreign tax credits made available for all foreign withholding tax imposed on intangible income earned by US companies.