Vodafone Pays 19% Less in U.K. Taxes After Spending Boost
Dec. 18 (Bloomberg) -- Vodafone Group Plc’s U.K. tax
payments dropped 19 percent last fiscal year after the wireless
carrier took advantage of breaks offered to companies that
invest in local communication networks.
Vodafone paid 275 million pounds ($450 million) for the
year ended in March 2013, down from 338 million pounds a year
before, according to a statement from the Newbury, England-based
company today. The sum includes fees paid on everything from
garbage removal to property. Vodafone said its U.K. corporation
tax, or the tax levied on profit, was negligible.
The carrier said it spent more than 1 billion pounds last
year on building and upgrading its network carrying calls and
data traffic. The company, which operates in 21 countries, said
the competitive U.K. market generates little profit for it.
“All over the world, governments seeking to encourage
companies to create jobs and build infrastructure develop a
range of tax incentives to attract new capital investment. The
U.K. is no different,” Vodafone said in a section of the
statement titled “Why does Vodafone pay little or no U.K.
Vodafone is one of several large companies that have
attracted controversy in the U.K. for a perception that they
don’t pay enough tax. In October 2010, London protesters
blockaded a Vodafone store and called the company “tax
dodgers” after a 1.25 billion-pound settlement ended a decade-long dispute over how its business in Luxembourg reduced its tax
bill. Starbucks Corp., Google Inc. and Amazon.com Inc. have also
been questioned by U.K. lawmakers on their taxes.
Vodafone said today that the 2010 settlement is “highly
complex” and focused on an area of tax law that was unclear.
Changes to U.K. law this year mean that a portion of Vodafone’s
profit in Luxembourg will be taxable in the U.K., Vodafone said.
The company uses Luxembourg as a base for financing
activities. Luxembourg law allows companies to use historical
losses to count against future tax payments, which let Vodafone
use losses from the dot-com crash in 2000 to lower its rate.
For the latest fiscal year, Vodafone reported revenue of
44.4 billion pounds and profit of 673 million pounds. Revenue in
the U.K. was 5.15 billion pounds and profit was less than 300
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Last Updated: December 18, 2013 09:00 EST