Diageo warns it could leave UK over tax

THE head of Diageo yesterday threatened to take his company abroad because of UK tax laws.

Chief executive Paul Walsh said that it was “very difficult” to locate staff in the UK where they could be hit by a 50 per cent tax rate.

He also called for corporation tax to be cut and the tax system streamlined. Diageo employs 6,000 people at its London headquarters.

He said: “We are a global company, we enjoy being headquartered in London, but if the tax regime becomes so egregious, either for corporates or individuals we would have no option but to look at alternatives. The UK has become progressively a less attractive location to base oneself in.”

The company, which owns brands such as Johnnie Walker whisky, Smirnoff vodka and Guinness stout, had been offered tax breaks by a Swiss canton if it relocated there.

Pre-tax profit for the six months to December 2009 fell slightly to £1.39bn from £1.41bn a year ago.

Diageo said in a statement that it had faced a “challenging” six months as the consumer environment remained weak. Sales in the first quarter were six per cent lower, but picked up by two per cent in the second.

Walsh added: “If you look at the second quarter it’s clear that the US and Europe remain pretty slow but markets such as Asia, Latin America and Africa are quite buoyant.”

Diageo announced plans to close its Johnnie Walker bottling plant in Kilmarnock and its Port Dundas distillery in Glasgow in July, with around 900 jobs to be axed.

Diageo has 6,000 staff in London and 22,000 worldwide in 80 countries.
Diageo formed in 1997 from a GrandMet and Guinness merger: Diageo is from the Latin for day (dia) and the Greek for world (geo).