Vodafone is facing fresh controversy over tax after it emerged that the mobile phone giant did not pay any corporation tax in Britain last year.
And how was it able to do that then?
Vodafone was able to avoid paying corporation tax in Britain last year by off-setting the bill against its capital expenditure, which rose from £516m to £575m.
It invests £1.5m a day in mobile networks in Britain, and is still writing tax off against the £5.96bn it paid the government for mobile spectrum in 2000. It also paid around £700m in payroll and other taxes last year.
So there isn't a controversy as no tax evasion or even avoidance has taken place. The company is simply investing in its network - that'll be to cope with the massive increase in data usage from smart phones and new technologies like 4G. This is a good thing - it sets the company up for the future in an extremely competitive market, hopefully to generate decent returns for its shareholders, pay tax on profits, and create jobs. Without the capex, there will not be a Vodafone UK in the future. The government of course recognises this and hence the favourable tax treatment, which applies to all companies and not just Vodafone. However, this is not good enough for UK Uncut:
Press release: UK Uncut condemn Vodafone for paying no UK corporation tax in 2011
The ignorance of UK Uncut on this doesn't surprise me but this is perhaps its biggest blunder to date. Of more concern is that the most read (and right-leaning) broadsheet in the UK has run such a misleading story. The implication here is that the UK is being portrayed as anti-business, just at a time when we need private sector investment to create jobs for people who will in turn pay taxes and probably spend a good chunk of their earnings in the UK. Not to mention the potential benefits that stable, high speed internet will bring to the economy.