HALF the FTSE top 10 companies paid no or very little corporation tax last year, the Eye has established. But so generous are UK tax laws, they did so without resorting to any form of tax avoidance. How come?
In a nutshell, it�s easy enough to shunt income and expenses around without exploiting clever loopholes (which is essentially the government�s definition of tax avoidance) so there�s nothing for the UK taxman to get hold of. Then whatever is left can often be swallowed up by generous reliefs. Hence a review by the Eye of tax payments reported last year by the biggest British multinationals reveals that four of the top ten FTSE companies paid no corporation tax.
Vodafone has 24 percent of the UK mobile phone market but pays no UK tax because it borrows money here for use around the world but gets a tax break for interest on the whole lot � even the tens of billions it funnels through Luxembourg so that it pays less tax in other countries too.
AstraZeneca makes and flogs some of the bestselling drugs for everything from indigestion to cancer and makes immense profits worldwide, as well as profits in its main UK company of more than �400m; but it paid no tax in the UK owing to the similar way it funds its business and extra tax allowances for research costs.
SABMiller gets plenty of Brits drunk on Grolsch and Peroni, but its profits from selling these are wiped out for tax purposes by the costs of running its head office from London, for which the taxman generously gives relief. Result: no UK corporation tax.
GlaxoSmithkline reported a tax credit in the UK for 2014-15 in accounting terms, which it said in fact masked a cash payment, but would not say how much. Its biggest UK company GlaxoSmithkline Services Unlimited, which provides services to companies around the world, turned over �2.9bn while paying no tax, while the company that flogs the drugs, GlaxoSmithkline UK Ltd, appeared to pay a paltry �14m or so, with a similar charge in the group�s UK research company.
Tax bribes
Worldwide the drugs company made a �3bn profit, which at UK rates would have produced a tax charge of around �640m, but reduced this by a stonking �328m through the �benefit of intellectual property incentives� � otherwise known as tax bribes from various countries� taxpayers (including the UK�s).
Meanwhile, causing many of the problems that GSK profits from treating, British American Tobacco pays no corporation tax for much the same reason as Vodafone. In fact the merchant-of-death�s accounts show that a court of appeal hearing this year, on a dispute with HMRC going back decades to when companies had to pay tax on dividends, could land the firm a �1.2bn windfall from the exchequer.
Chancellor George Osborne has often claimed to be at the forefront of global efforts to stop tax abuse by multinationals; but he has yet to implement changes proposed for this purpose by the Organisation for Economic Cooperation and Development. A �consultation� on the big tax break exploited by the companies above trundles on and Britain looks set to remain the tax haven of choice for multinationals for a while yet.
