Vodafone makes significant contributions to all the economies of the countries in which we operate as a major investor, taxpayer, employer and purchaser of local goods and services: in 2015-16 we contributed £11.4 billion, in cash, to those governments.

We fully recognise and value the benefits for society as a whole that arise from well-functioning taxation systems that command public confidence. Tax is an important way for governments to raise the revenue needed for reliable public services and civil infrastructure – the cornerstone of well-functioning societies. We believe that increasing public understanding of, and trust in, the tax system is strongly in the interests of every business. Central to that belief is the principle that Vodafone will act with integrity, honesty and transparency in our tax strategy, policy and practices, including a policy of full transparency with tax authorities and a commitment that we will always pay all taxes properly due under the law wherever we operate.

 

Taxation and our total economic contribution to public finances

This is Vodafone’s fifth report setting out our total contribution to public finances. Between 1 April 2015 and 31 March 2016 we contributed more than £11.4 billion in cash to the public finances of our countries of operation. With increasing levels of disclosure each year, we now report on all countries in which we have a separate legal entity, including the smallest of our non-operating subsidiaries.

New this year: total revenue and profit before tax

In light of stakeholder discussions and our continuing commitment to transparency, this year we report total revenue and profit before tax in each country, in addition to direct taxation, direct non-taxation and indirect taxation revenues.

Key figures for 2015-16

Taxes paid

total contribution, in cash, to governments in our countries of operation

 

Our total contribution to governments of £11.4 billion is made up of:

Financial summary

Revenue

 

Service revenue

 


EBITDA



Profit before tax




Capital expenditure

470 million
mobile customers
 
470 million
fixed broadband customers
 
107,000
employees globally

Clarifying some common areas of confusion

We believe it is possible to achieve an effective balance between a company’s responsibilities to society and our obligations to our shareholders. In a climate of growing public distrust, however, misunderstanding around some of the fundamental aspects of how tax liabilities are assessed, charged and reported, can exacerbate that mistrust. Five areas that are a common source of confusion are:

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  • ‘Corporation tax’ is not the same as ‘all taxes paid by a company’
  • Many corporate taxes are paid on profits, not on revenues
  • Taxation is local
  • Taxation is not the only route used by governments to raise revenue from businesses
  • Governments use tax regimes to incentivise investment

Why does Vodafone pay little or no UK Corporation Tax?

All governments seek to adjust their tax regimes to stimulate investment and encourage job creation and the UK is no different. It allows companies to claim tax relief on capital investment in their UK operations and the UK Government also provides tax relief to all businesses to reflect the interest costs on the debt raised to fund investment, which has the effect of stimulating investment by businesses. Vodafone makes huge investments in the UK and spent over £1.2 billion in 2015-16 building and upgrading the networks and services relied on by millions of our customers.

Vodafone, Luxembourg and ‘tax havens’

Many governments choose to develop tax regimes that offer multinational companies some form of competitive advantage in order to attract inward investment. As a consequence, variations have emerged between the tax regimes of different countries over the years and some countries have found themselves called ‘tax havens’, particularly where specific aspects of the national tax system offer significant advantages to businesses who choose to locate there.

Report archive

 

To see our previous disclosures of Tax and our total contribution to public finances please click on the links below: