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.