VODAFONE, one of the FTSE 100’s biggest companies, did not pay a penny of corporation tax in the UK last year.
But the telecoms giant said it makes it main contribution to the UK economy via investment rather than taxes.
“Last year, Vodafone’s UK capital expenditure went up from £516m to £575m – which means we were spending about £1.5m per day on our UK network,” a Vodafone spokesperson told City A.M.
The company generates four per cent of its group operating profits in the UK, and said it paid the exchequer about £700m last year through payroll taxes and NI contributions.
“The UK law permits companies to offset interest costs and capital expenditure against profits – and the telecoms industry is capital expenditure heavy,” said the Vodafone spokesperson.
The London-listed telco made £1.3bn before interest and taxes in the UK last year, compared to the £14.5bn it earned globally, of which £10.5bn was generated across Europe.
But while Vodafone – whose global tax charge increased by around £300m to £2.3bn for the year, leading to a 25.3 per cent tax rate – claimed it was not doing anything unusual for a UK company, some will see this as the latest in a long line of problematic tax headlines for the mobile network operator.
Two years ago, HMRC agreed a £1.2bn tax settlement with Vodafone from a transaction thought to be worth much more. The telco was also accused of standing to gain £1bn in tax benefits from its £1bn Cable & Wireless Worldwide takeover, and is in an ongoing tax spat with the Indian government over its 2007 acquisition of Hutchison Whampoa’s Indian arm.