By Tom Bergin
LONDON, June 7 (Reuters) - Vodafone Group Plc saidit paid no corporation tax in Britain for the year to March2013, prompting fresh criticism from campaigners who have madethe UK mobile telephone group a target in the debate oncorporate tax payments.
Revelations of profit shifting by big companies haveprovoked anger among austerity-weary citizens across Europe andpolitical leaders have pledged to act.
Vodafone's annual report published on Friday said theabsence of a UK income tax bill for the second year runningreflected tough operating conditions at its British operations.
Reported profits at Vodafone's main UK unit have collapsedin the past decade, even as sales soared. The company blames thecost of buying its third generation (3G) phone licence andfalling profit margins, although both factors were also observedat its German unit, which has continued to report big profitsand tax bills.
UK press including British investigative magazine PrivateEye have noted strong profits at Vodafone's subsidiaries inLuxembourg, where it has few customers or employees but wherecompanies can enjoy tax rates below 1 percent.
Vodafone Procurement Co Sarl, which buys equipment for thegroup, reported profits of 215 million euros ($284.2 million)for the year to March 2012 and paid no income tax, according toaccounts for the period, the most recent for which figures areavailable.
OTHER TAXES
Vodafone Luxembourg 5 Co Sarl, which lends money to othergroup units, reported profits of $2.43 billion for the year toMarch 2012 and reported a tax bill of less than 1 percent, itsaccounts show.
Vodafone has denied shifting profits out of the UK and addedit also paid other taxes in Britain, such as payroll taxes andvalue added tax (VAT), a European form of sales tax.
The company declined comment on its Luxembourg operations.
It said on its website: "Companies have legal obligations topay tax, but those obligations do not extend to paying more thanthe amount legally required. Companies also have a legalobligation to act in the interests of their shareholders".
The company has been under scrutiny since a 2010 deal underwhich it paid the UK tax authority, Her Majesty's Revenue andCustoms (HMRC), 1.25 billion pounds ($1.9 billion) to settle aback-tax claim, for which it took a 2.2 billion pounds provisionin its accounts.
Some lawmakers criticised that deal as pointing to atoo-cosy relationship between big business and HMRC. Asubsequent review by a government watchdog said the deal was"reasonable" but criticised processes at HMRC.
Tax campaigner Richard Murphy of Tax Research UK saidVodafone's explanation for its lack of a UK tax bill did notstack up.
"Vodafone would like us to believe that because they paytheir property taxes, VAT and staff's national insurance, thatthey don't have to pay tax on their income," he said. "That'snot the way it works for the rest of us and it's not the way itshould work for Vodafone either."
Vodafone (VOD)
