Vodafone defends corporation tax avoidance despite £41m profits
Operator’s CFO Nick Read tells Mobile News it doesn’t make the profits to justify paying it
Vodafone says it can not “justify” paying corporation tax in the UK despite posting earnings of £1.3 billion and operating profits of £41 million in its full year financial results (ending March 31).
The controversial claim was made by Vodafone chief financial officer Nick Read (pictured) during a round table event in London last week.
He told Mobile News the operator had paid more than £360 million in “direct taxes” in the UK, but legacy debts dating as far back as 2001, meant profits today were still not high enough to warrant the payment for a third consecutive year.
He added he did not expect Vodafone’s situation to change any time soon.
“We still have the legacy of the capital allowances, plus the significant debt we took on to buy spectrum in 3G (£5.9 billion, 2000) and 4G (£790 million, 2013),” Read explained.
“The interest costs bearing on that, in a business that makes very low margins, we don’t make the profits to justify paying corporation taxes.”
Letter and spirit
Corporation tax is levied on profits made by companies in the UK. Vodafone is entitled to offset this profit against interest payments made on legacy debts, as well as any further investments, meaning they are not legally obliged to pay.
EE confirmed it had not paid Corporation Tax in 2013 citing £17 billion of investments in infrastructure – it said it adhered to both the “letter and spirit of UK tax law” and expected to pay some in coming years.
O2 said it paid more than £100 million in 2012 and 2013, and over £600 million since 2008.
Three declined to reveal its current position.