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Vodafone deny dodging corporation tax





Reports in the national media stated that the mobile phone operator off-set the tax bill against its capital expenditure, which rose from £516m to £575m.
Despite an increase in earning before interest and tax, the firm’s British corporation tax bill fell from £140m in the year to March 31, 2011 to zero.
The Sunday Times reported that Vodafone had used a web of offshore companies, mainly based in tax-haven Luxembourg, to erase its liability, and even claimed a tax refund from the government worth £4 million.
The firm has acted within the law but has again sparked anger in regard to its tax-paying responsibilities.
Protest group UK Uncut condemned the reports and said the firm’s “cosy” relationship with the Government must be scrutinised.
UK Uncut has run demonstrations against the communications giant since October 2010 after Vodafone reached a ‘settlement’ on a long standing tax dispute with HMRC which was believed to have saved it up to £6billion in tax.
Green Party spokesman, Adrian Hollister, from Brightwalton, has been a frequent critic of Vodafone's tax history, and he called on the Government to intriduce a windfall tax on people, trusts and companies “to ensure that they pay fairly and in the spirit of honesty within the countries that they trade.”
“I can't help wondering why our tax system is designed to support the rich and the largest corporations (both of whom seem to pay little or no tax)," he said.
"By moving money to overseas locations and transacting through countries with no tax/lax laws and no accounting standards, the super-rich and large corporates get away with a lot. It's about time these groups paid fairly and in the spirit of honesty within the countries that they trade.”
Vodafone Group released a statement in response to the claims and criticism and said its UK corporation tax liabilities had nothing to do with its Luxembourg subsidiary.
The firm said for every £4 it makes in profit it pays £1 in corporate taxes globally.
“Even though only 4 per cent of our overall operating profit comes from the UK, we contribute around £700m to the UK exchequer every year,” it said.
“We paid £14bn into the public purse worldwide in 2011 if you include payroll and sales taxes as well as fees for spectrum.
“As in most countries, there are tax reliefs for capital investment and interest costs in the UK, which applied in this case.
“We are an international business: 96 per cent of group operating profit, 95 per cent of our customers and more than 90 per cent of our employees are outside the UK.
“This is reflected in a £300million increase in tax paid outside the UK in 2011-12: we make more money elsewhere, so we pay more taxes elsewhere.
“We paid more than £2.3bn in taxes around the world last year.”
It also emerged that the firm’s highest paid employee, chief executive Vittorio Colao, more than doubled his pay package last year from £6.6m to over £14m including more than £12million in bonuses.



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