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.

Tax and our total contribution to public finances 2014–15

This report details our total contribution to public finances in each country of operation, including:

  • the direct and indirect taxes we paid in 2014–15 as well as other contributions to governments, such as spectrum fees
  • our investment in our network infrastructure and services, which support our activities around the world
  • the numbers of employees in each of our markets

Our total contribution to public finances

Our total contribution to public finances is made up of a wide range of taxes as well as non-taxation-based revenue mechanisms, such as spectrum licences and regulatory fees. We also make a significant indirect contribution to the public purse through the taxes paid by our employees and our suppliers, as well as through taxes collected on governments’ behalf, such as sales taxes and VAT.

our total contribution to public finances in all our countries of operation

Our total contribution to public finances of £9.3 billion in 2014–15 is made up of:

£2.3 billion

in direct taxes to governments in our countries of operation

£1.3 billion

in other direct non-taxation-based fees and levies payable to governments

£5.7 billion

in indirect tax contributions to national governments

Building our networks and services

In 2014–15, we continued to make a vital contribution to the delivery of governments’ policy objectives through our substantial capital expenditure in building the next generation of digital infrastructure.

invested in our networks and services, which are used by more than 454 million mobile customers and 12 million fixed broadband customers worldwide

Employment

In 2014–15, we employed 101,443 people in more than 27 countries. We also work with thousands of suppliers and partner companies around the world, each of which relies to a greater or lesser extent on revenues from Vodafone.

101,443101,443

people employed globally in our operating companies

Our commitment to transparent reporting

Vodafone has long demonstrated its commitment to transparency through the publication of our tax code of conduct, tax risk management strategy and our annual transparency report: Tax and our Total Economic Contribution.

Our tax contributions to governments are reported on an actual cash paid basis for each local market as, in our view, these are among the most meaningful and transparent metrics to consider when assessing a company’s tangible role in helping to fund public services.

The data we provide is intended to provide an insight into Vodafone’s significant economic contribution to the societies in which we operate. We offer no view on the merits of direct versus indirect taxation, nor on the distinction between the revenues that flow to governments from taxation versus those obtained through other means, such as spectrum fees. Governments – not companies – determine the rules.

We continue to welcome initiatives to increase transparency in this critically important area of public policy, and support measures to eliminate artificial profit shifting and unfair tax competition.

Our conduct and principles

We are committed to acting with integrity in all tax matters. We always seek to operate under a policy of full transparency with the tax authorities in all countries in which we operate. We disclose all relevant facts in full while seeking to build open and honest relationships in our day-to-day interactions with those authorities in line with our tax code of conduct contained within our tax risk management strategy.

In forming our own assessment of the taxes legally due for each of our businesses around the world, we follow the principles stated in our tax risk management strategy, which outlines two important objectives: to protect value for our shareholders, in line with our broader fiduciary duties; and to comply fully with all relevant legal and regulatory obligations, in line with our stakeholders’ expectations.

Our overarching approach is to pursue clarity and predictability on all tax matters wherever feasible. We will only enter into commercial transactions where the associated approach to taxation is justifiable under any reasonable interpretation of the underlying facts, as well as compliant in law and regulation. Our tax teams around the world are required to operate according to a clearly defined set of behaviours, including acting with integrity and communicating openly.

Vodafone’s tax principles

We will:

  • comply fully with all relevant legal and regulatory obligations in line with our broader social responsibilities and our stakeholders’ expectations
  • act with integrity in all tax matters, disclosing all relevant facts to tax authorities in all countries in which we operate under a policy of full transparency based on open and honest relationships with those authorities
  • pursue clarity and predictability on all tax matters, wherever feasible
  • seek to protect shareholder value in line with our broader fiduciary duties

 

We will not:

  • seek to establish arrangements that are artificial in nature, are not linked to genuine business requirements and would not stand up to scrutiny by the relevant tax authorities
  • artificially transfer profits from one jurisdiction to another to minimise tax payments
  • pay more tax than is properly due under a reasonable interpretation of the law and upon receipt of a lawful demand

 

Introducing country-by-country narrative reporting

In this year’s report we have increased the range and depth of disclosure to provide greater insight into the factors that determine our overall tax and economic contribution in a specific market. For each country, we now include a narrative summary setting out the context of our activities in that location together with the relevant financial data. That summary includes the number of Vodafone legal entities present in the country plus an overview of the purpose of those entities.

The countries included in the report this year extend beyond those in which we have an operating company to include three further categories:

  • countries in which we maintain an active corporate function servicing the Group as a whole but where we do not operate as a communications provider
  • countries in which we have a legal entity focused on marketing, sales and client support for large corporate and multinational customers but do not operate as a communications provider
  • countries in which we have legacy legal entities that were inherited as part of an acquisition in the past and that do not play an active role in the Group’s overall structure or are otherwise dormant

 

In a number of countries we also have holding companies that manage our subsidiary investments and joint ventures.

Vodafone in the UK

In 2014–15, Vodafone paid the UK Government £320 million in direct taxes, and our total cash contribution to the UK Government was over £1.0 billion. Vodafone UK’s profit remains a small fraction of our gross UK revenues, below £50 million in 2014–15, which is significantly less than the interest costs on our UK debt and less than 5% of our annual UK capital investment programme.

Vodafone makes huge investments in the UK. We spent over £1.3 billion in 2014–15 building and upgrading the networks relied upon by millions of UK consumers and businesses. Vodafone has also paid the UK Government more than £7 billion for our UK 3G and 4G radio spectrum licences since 2000. We raised the money for those licences from UK banks and capital markets, and we are paying more than £350 million a year in interest costs on our overall UK borrowings to UK banks and financial institutions.

Vodafone’s operations in Luxembourg

Vodafone has a meaningful presence in Luxembourg and our business there plays a material role in any assessment of our overall contribution to public finances. Vodafone Luxembourg subsidiaries are substantive businesses employing around 300 people in our Luxembourg headquarters building, where:

  • we manage the financing of many of our international operating companies, providing loans on a commercial ‘arm’s length’ basis (which reflect the costs of borrowing from an external bank in line with international best practice)
  • our Luxembourg-based global purchasing organisation – the Vodafone Procurement Company (VPC) – oversees more than €14 billion of global purchasing contracts
  • our international roaming team who manage approximately 640 international roaming agreements that enable Vodafone customers to communicate when travelling across more than 200 countries