Vodafone pays less tax in the UK than last year

In the UK, Vodafone’s country of domicile, Voda’s total direct tax contribution to the UK Exchequer in 2014–15 was £320 million, down from the £350 million it paid in 2013–14. That’s almost a 9 percent tax decrease.

The company publishes a detailed breakdown of what tax it pays in what countries after it came under fire from UK anti-austerity campaigners for “not paying enough”.

In 2014–15, Vodafone contributed more than £9.3 billion in cash to the public finances in its countries of operation compared to £14.8 billion in 2013–14. Vodafone says this overall reduction in its contribution is mainly as a result of the sale of its US interests during 2013–14.

Across the group as a whole, the “adjusted effective tax rate” at the end of the 2014–15 year was 29.4 percent, said the company. “We therefore will pay almost £3 in tax for every £10 we make in profit across our countries of operation,” said Vodafone.

At the country level, “our total contribution is broadly in line with last year in the majority of markets”, with “some exceptions reflecting local circumstances such as increased capital expenditure” [and therefore capital allowances] or the “effect of changes to local tax rules”, added the company.

In its latest global tax report published today, Vodafone says of the UK tax payment situation: “Vodafone makes huge investments in the UK. We spent over £1.3 billion in 2014–15 building and upgrading the networks relied upon by millions of UK consumers and businesses. In addition, since 2000, we have paid the UK Government more than £7 billion for our UK 3G and 4G radio spectrum licences.

“We raised the money for those licences from UK banks and capital markets and we are paying more than £350 million a year in interest costs on our overall UK borrowings to UK banks and financial institutions.”

It goes on: “ Vodafone is no different from any other UK business, whatever its size: if a self-employed trader buys a new computer or a large UK business borrows money to build a new warehouse, exactly the same rules apply.”

Corporation tax is charged on profits, not revenues. Vodafone says the UK has “one of the least-profitable mobile markets in the world” and that “many people confuse revenues with profits”.

Voda says its UK profit is a “small fraction of gross UK revenues” – below £50 million in 2014–15, which is “significantly less” than the interest costs on its UK debt, and less than 5 percent of its annual UK capital investment programme.

Whether its report will appease the campaigners is another story however.

@AntonySavvas