In the company’s annual report, published today, it is revealed that Vodafone’s UK corporation tax bill was zero for the second year in a row, despite global profits of £3 billion and UK profits of £5 billion.
Vodafone reported revenues of nearly £45bn last year, underlying earnings of £13bn, and global profit of more than £3bn. The UK business generated over £5bn in revenues and £1.2bn in underlying earnings.
The company paid tax amounting to £2.6bn to other countries, but its UK corporation tax bill remained at zero. This is because of the tax breaks Vodafone gets on the cash they invest in buying spectrum - or airwaves - and network equipment, and on the £300m in interest it still pays every year on money raised to buy spectrum at the 3G airwaves auction 13 years ago.
The company stressed that it did pay £24m in the respect of recalculated tax for previous years, and insisted that they are committed to “integrity in all tax matters”.
In light of the eurozone crisis, which has affected Vodafone’s revenues in that region, the company’s Chief Executive, Vittorio Calao, has taken a pay freeze for the second year in a row; according to the annual report he earned £11m last year.
It is likely that the news regarding Vodafone will further fuel the debate around corporate tax contributions, which has already seen bosses of Starbucks and Google questioned by MPs.
In a special report on tax published alongside their annual report, Vodafone stated that “Individuals and companies have legal obligations to pay tax; but these obligations do not extend to paying more than the amount legally required.”