(Updates with taxation details in second paragraph.)
Dec. 18 (Bloomberg) -- Vodafone Group Plc’s U.K. tax payments dropped 19 percent last fiscal year after the wireless carrier took advantage of breaks offered to companies that invest in local communication networks.
Vodafone paid 275 million pounds ($450 million) for the year ended in March 2013, down from 338 million pounds a year before, according to a statement from the Newbury, England-based company today. The sum includes fees paid on everything from garbage removal to property. Vodafone said its U.K. corporation tax, or the tax levied on profit, was negligible.
The carrier said it spent more than 1 billion pounds last year on building and upgrading its network carrying calls and data traffic. The company, which operates in 21 countries, said the competitive U.K. market generates little profit for it.
“All over the world, governments seeking to encourage companies to create jobs and build infrastructure develop a range of tax incentives to attract new capital investment. The U.K. is no different,” Vodafone said in a section of the statement titled “Why does Vodafone pay little or no U.K. corporation tax?”
Vodafone is one of several large companies that have attracted controversy in the U.K. for a perception that they don’t pay enough tax. In October 2010, London protesters blockaded a Vodafone store and called the company “tax dodgers” after a 1.25 billion-pound settlement ended a decade- long dispute over how its business in Luxembourg reduced its tax bill. Starbucks Corp., Google Inc. and Amazon.com Inc. have also been questioned by U.K. lawmakers on their taxes.
Vodafone said today that the 2010 settlement is “highly complex” and focused on an area of tax law that was unclear. Changes to U.K. law this year mean that a portion of Vodafone’s profit in Luxembourg will be taxable in the U.K., Vodafone said.
The company uses Luxembourg as a base for financing activities. Luxembourg law allows companies to use historical losses to count against future tax payments, which let Vodafone use losses from the dot-com crash in 2000 to lower its rate.
For the latest fiscal year, Vodafone reported revenue of 44.4 billion pounds and profit of 673 million pounds. Revenue in the U.K. was 5.15 billion pounds and profit was less than 300 million pounds.
--Editors: Ville Heiskanen, Kenneth Wong