According to the Private Eye, Vodafone’s dodging another £2 billion a year in tax with a complicated internal loan scheme. It was apparently cleared with the company’s other tax dodging plans in the controversial tax write-off by the HM Revenue and Customs 18 months ago.
It seems Vodafone’s using both Luxembourg and Swiss law to allow a the US Vodafone America Holdings Inc, which owns a 45 per cent chunk of Verizon Wireless in the US, to “borrow” money from a company called Vodafone Luxembourg 5 sarl. It wasn’t a small amount either -- $27 billion in total. Vodafone Luxembourg 5 sarl, which had migrated to Jersey since the loan, now earns $2.5bn a year in interest on the loan, coming in at around £7.5bn by March 2011.
British anti-tax avoidance laws dictate that these profits should be taxed in the UK, which would have produced another tax bill in the region of £2bn -- not a small amount when we’re teetering on the brink of another recession.
Private Eye is estimating that Vodafone’s combined dodgy dealings have cheated the UK taxpayer out of well over £6bn in tax. The whole thing is currently under investigation by the National Audit Office (NAO), which is why this latest scandal his risen its ugly head. It’ll be interesting to see what the NAO makes of all this, whether the original, and now this newly revealed tax dodge, are actually valid; even if they aren’t ethical
Whatever the law says, as a UK taxpayer, I reckon it’s totally off. In terms of big business, I’m certain dodgy things like this go on all the time. But considering the country could really do with £6bn odd in tax, I’m hoping the NAO finds Vodafone has to cough up – either that or it has to give everyone in the country a free phone. [Private Eye]
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