Our contribution, country by country

Vodafone plays an important role in helping to develop the economies of the countries in which we operate. We are a major investor, taxpayer, employer and purchaser of local goods and services. We also make a vital contribution to the delivery of governments’ policy objectives through our substantial capital expenditure in building the next generation of digital infrastructure.

We contribute directly to public finances through a wide range of taxes as well as non-taxation revenue mechanisms such as licence and regulatory fees. We also make a significant indirect contribution through the taxes paid by our employees and the suppliers that our businesses support (many of which are effectively dependent on the fact that we do business in the country in question), as well as through taxes collected on governments’ behalf, such as sales taxes and VAT.

Assessing our contribution to public finances

The following table sets out the data for five of the most relevant indicators of Vodafone’s total overall contribution to the public finances and wider economies within which we operate.

Certain data is only gathered and reconciled some time after the end of the previous financial year, for example, in relation to some non-taxation-based fees paid to national governments. Therefore, to ensure the most effective comparisons between different types of contribution within the same period, all the data presented in the table below is for the 2011/12 financial year and is drawn from our audited accounts.

In the 2011/12 financial year, Vodafone’s businesses around the world paid more than £3.3 billion in direct taxes to governments in our countries of operation plus more than £1.8 billion in other non-taxation-based fees and levies. Our businesses also made a total indirect tax contribution to national governments of more than £5.9 billion. Our total cumulative contribution to the public finances of our countries of operation was therefore more than £11.1 billion. We also invested more than £6 billion in the networks and services now relied upon by more than 400 million customers worldwide.

In the table below, the direct tax contributions to governments are reported on an annual 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. International accounting rules governing the reporting of a multinational company’s profit and loss tax liabilities and charges are complex, reflecting a wide range of factors such as deferred taxation, losses, group-level taxation and various provisions related to uncertain tax positions. The cash payments or reliefs arising from those factors may be several years in the future. As a result, there can be a variance between a multinational company’s statutory reported numbers over a specific time period – particularly in territories with holding companies as well as a local operating company – and the actual cash paid numbers set out below1.

For more detailed information about our latest financial performance in 2012/13, see our Annual Report.

The columns in the table are explained below.

  • Direct government revenue contribution: taxation. This encompasses Vodafone’s total direct tax contribution in each country, including corporation tax, business rates or equivalent, employers’ national insurance contributions or equivalent, municipal and city taxes, sector-specific taxes (such as ‘special’ taxes, ‘telecoms’ taxes or ‘crisis’ taxes), stamp duty land tax, stamp duty reserve tax, irrecoverable Value Added Tax (VAT), insurance premium tax, climate change levy, environmental taxes, customs duties, fuel excise duties, vehicle excise duty and acquisition taxes. An illustrative list of the types of taxes paid is set out in the Appendix

  • Direct government revenue contribution: non-taxation mechanisms. This encompasses all other forms of government revenue raised in addition to a country’s direct taxation regime, including telecoms licence fees, radio spectrum management fees, proceeds from revenue-sharing agreements, usage fees and proceeds from radio spectrum auctions. Examples of these payment types are listed in the Appendix

  • Indirect government revenue contribution. This encompasses taxes collected by companies on behalf of national governments, including Pay As You Earn (PAYE) income tax, employees’ National Insurance contributions, withholding taxes, sales and consumption taxes, and VAT. These indirect contributions to government revenue would not be collected (or generated to the same extent) if the company did not employ people and offer services or products to the customers responsible for paying the tax in question, or procure goods and services from its suppliers on which such taxes are due

  • Capital investment. Our significant investments in building the networks and services relied upon by more than 400 million Vodafone customers around the world are often taken into account by local tax authorities when determining corporate tax liabilities

  • Direct employment. Vodafone is an important source of employment and skills transfer worldwide. We provide incomes, benefits and the potential for a high-technology sector career path for 91,272 people in more than 30 countries as of end March 2013 (2011/12: 86,373). In addition, we have contractual relationships with many thousands of suppliers and partner companies around the world, each of which relies to a greater or less extent on revenues from Vodafone to pay their employees’ wages

This data is intended to provide a broader insight into Vodafone’s significant economic contribution to the societies in which we operate. We have 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.

The figures set out in the table below will vary widely from country to country and from year to year as a result of local differences between, and annual movements in, factors such as levels of profit and capital investment. For example, next year’s table will reflect our considerable recent investments in radio spectrum during the 2012/13 financial year, particularly auction payments of almost £1,200 million to the Netherlands government and more than £800 million to the UK Government. There are also wide variations in local taxation regimes and other government revenue-raising mechanisms, many of which change from year to year.

Total Economic Contribution – country by country

FY2011/12 1A. Direct revenue contribution: taxation 1B. Direct revenue contribution: other non-tax 2. Indirect revenue contribution 3. Capital investment 4. Direct employment
  £m £m £m £m  
Global total 3,371 1,839 5,931 6,061 79,5442
N&CE region
Czech Republic 43 8 74 85 2,974
Germany 160 0 892 1,044 12,115
Hungary 33 0 45 55 1,543
Ireland 22 8 84 117 1,122
Netherlands 43 0 217 243 3,034
Romania 64 13 92 80 3,515
Turkey 299 19 446 266 3,312
UK 338 21 523 767 8,151
Total 1,002 69 2,373 2,657 35,766
SE region
Albania 6 1 12 22 438
Greece 25 6 217 78 2,225
Italy 668 1,069 1,333 653 5,838
Malta 5 2 6 9 312
Portugal 71 91 149 151 1,505
Spain 225 71 334 429 4,379
Total 1,000 1,240 2,051 1,342 14,697
AMAP region
DR Congo 54 5 3 24 585
Egypt 100 57 170 209 4,384
Ghana 6 2 46 57 1,392
India 257 414 802 815 11,234
Kenya 98 29 92 71 2,701
Lesotho 6 2 2 7 131
Mozambique 1 0 3 45 236
New Zealand 57 1 57 106 1,922
Qatar 0 1 0 69 378
South Africa 374 18 291 603 5,147
Tanzania 16 1 31 43 477
Total 969 530 1,497 2,049 28,587
 
Non-OpCo1 400 0 10 13 494

Contributions made directly by the Group’s joint ventures and associate interests are included in the table above for countries where Vodafone is the largest shareholder in the local entities in question. Contributions are not included for the US, Australia and Fiji, where Vodafone is not the largest shareholder in the relevant local entities. Contributions from our wholly owned US holding companies relating to Vodafone’s 45% interest in Verizon Wireless are included in the ‘non-opco’ line.

Notes:

  1. ‘Non-OpCo’ includes (i) subsidiaries in countries with no Vodafone operating companies such as Luxembourg (location of the Group’s global procurement, financing and roaming operations) and (ii) holding company entities in the US relating to the Group’s 45% interest in Verizon Wireless.
  2. The global total direct employment number does not include some roles in global functions and some joint venture/non-controlled assets.

The source data is predominantly drawn from information included within the publicly available Vodafone Group Annual Report & Accounts, the public accounts of the Group’s listed operating company subsidiaries and the accounts of various non-listed Group operating company subsidiaries. The Vodafone Group public accounts are certified by the Group’s external auditors Deloitte, and the public accounts of the Group’s listed operating company subsidiaries are certified by those companies’ external auditors. Additional data is subject to assurance by Ernst & Young, in line with the approach taken for other metrics disclosed in the Vodafone Group Sustainability Report.

Key Vodafone Group financials and statistics at global level

  2010/11 2011/12 2012/13
Revenue (£m) 45,884 46,417 44,445
Adjusted operating profit (£m) 11,818 11,532 11,960
Free cash flow (£m) 7,049 6,105 5,608
Market capitalisation (as at 31 March) (£m) 91,034 85,490 91,300
Group customers (million) 370.9 404.7 403.9

Appendix: taxation types

The table below provides an illustrative overview of the types of taxation paid by Vodafone operating companies around the world every year.

Direct taxation

Advertisement tax

Air passenger duty

Airtime excise tax

Business rates

Capital gains tax

Climate change levy

Commission levy

Communications services tax

Construction tax

Corporation tax

Customs duty

Donations tax

Economic activity tax

Education tax

Employers’ national insurance contributions

Environment tax

Excise duty

Expatriate tax

Fuel duty

Garbage tax

ICA/turnover tax

Import duty

Insurance premium tax

Interconnect tax

International inbound call termination surtax

Irrecoverable VAT

Judicial tax

Mobile telecoms services VAT

Mobile telecoms VAT (higher rate)

Municipal and city rates

Municipal tax on immovable property

Municipal waste tax

National health insurance levy

Numbering tax

PAYE settlements

Site rental tax

Social security tax

Special communications tax

Special consumption tax

Sprint payments

Stamp duty land tax

Stamp duty reserve tax

Tax on public domain/fixed lines

Technology tax

Universal service tax

Vehicle excise duty

Withholding tax

Workers’ compensation insurance levy

Non-taxation-based fees

Chamber of commerce fees

IMEI number registration fees

Licence renewal fees

National Copyright Collecting (SIAE) fees

Network usage fees

Proceeds from revenue-sharing agreements

Radio link fees

Spectrum auction receipts

Spectrum management fees

Telecoms levy

Telecoms licence fees

Usage fees

Wireless connection fees

Wireless usage fees