Vodafone pays no UK corporate tax for second year running

5904000 dv50956 Vodafone pays no UK corporate tax for second year running

The London-based telecom giant said investment in the UK coupled with interest payments eliminated its corporate tax liabilities at home, although the firm paid around £3bn in tax abroad. Vodafone raked in £45bn in revenues last year, with underlying earnings of £13bn and a global profit exceeding £3bn. More than £5bn in revenues were generated in the UK, though underlying earnings – income minus one-off items – fell to £1.2bn from £1.3bn. The firm’s UK operating profits fell to £294 million from £402mn a year prior amidst falling voice and service revenues. Mobile networks such as Vodafone are able to reclaim money spent developing their own networks, including the construction of radio masts to support antennae and the laying of cables. The company further received a return on part of the expenditures paid to the government to buy the airwaves which carry mobile traffic, as well as interest charges on cash borrowed in order to make those payments. A large portion of the firm’s infrastructure investment went towards new base station equipment, which will allow Vodafone to launch its 4G mobile broadband network over the summer. The firm was also able to avoid taxes by sending profits to its Luxembourg subsidiaries, where both its customer and employee base is low, and tax rates dip below 1 percent. Vodafone Luxembourg 5 Co Sarl, which funds money to other branches, reported profits of $2.43 billion for the year to March 2012 and paid a tax rate of less than 1 percent, Reuters reported. A spokesperson for the firm claimed Vodafone did not funnel profits out of the UK, insisting its Luxembourg operations had no bearing on taxes paid at home. He further explained that unites in the tiny European state are able to offset income against write-offs in the value of assets held by those companies. Vodafone stressed its commitment to “integrity in all tax matters,” noting that it paid £882mn in other UK taxes and contributions during the year. However, with £4.8bn in dividend payouts, the tax revelation is likely to spark further debate over domestic multinational tax contributions, with Google, Starbucks and Amazon all being called upon by parliament to justify their tax status.

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Vodafone pays no UK corporate tax for second year running


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