Mobile carrier Vodafone defended its financial arrangements today as it coughed to yet another legal dodge of UK corporation tax payments by asking Brits to have some sympathy over the huge debt mountain it is sitting on.
The multinational justified its actions by saying it was continuing to pump big sums of cash into Blighty by investing in building and upgrading networks and splashing out billions of pounds on UK radio spectrum licences - all of which meant the firm could enjoy hefty relief from the taxman.
Voda moaned that Britain has "one of the least-profitable mobile markets anywhere in the world" and added that it had only pulled in a modest profit during the company's 2012/13 financial year.
The result: zero pounds spent on corporation tax.
It said on its website under a heading entitled "Why does Vodafone pay little or no UK corporation tax?" that its less-than-£300m profit for the year was massively dwarfed by its interest costs on the substantial UK debt with which it is saddled – currently standing at an annual £600m-and-counting – which is paid out to banks and financial institutions, the company added.
Vodafone said that, over the last 12 months, it had splurged over £1bn on network upgrades in the country. On top of that, it paid the UK government a tidy £7bn for its radio spectrum licences.
"Taxation is not the only route used by governments to raise revenue from businesses," Vodafone said.
It went on to defend its biz practices by stating:
Vodafone does not enter into artificial arrangements – for example, by artificially diverting profits to minimise tax payments to the UK Exchequer – and will only adopt business structures that reflect genuine and substantive commercial and operational activities.
The company said that it paid £275m in direct UK taxes - a fall from £338m a year ago. Sales climbed to £5.15bn in Blighty, while Voda reported a slim £294m profit in the country.
It added that UK Controlled Foreign Company (CFC) rules introduced this year meant that some profits from Voda's Luxembourg subsidiary’s global financing activities would be taxable in Britain. ®