Our contribution, country by country

Vodafone plays an important role in contributing to 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 spectrum licences 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 dependent on our business), as well as through taxes collected on governments’ behalf, such as sales taxes and VAT.

Assessing our contribution to public finances

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

To ensure the most effective comparisons between different types of contributions are within the same period, all the data presented in the table below is for the 2013/14 financial year and is drawn from our audited accounts.

In the 2013/14 financial year, Vodafone’s businesses around the world paid more than £7 billion in direct taxes to governments in our countries of operation plus more than £1.9 billion in other non-taxation-based fees and levies. Our businesses also made a total indirect tax contribution to national governments of £5.8 billion. Our total cumulative contribution to the public finances of our countries of operation was therefore £14.75 billion. We also invested more than £7 billion in the networks and services now relied upon by more than 438 million mobile customers and 11 million fixed broadband 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 financial performance in 2013/14, see the Vodafone Group 2014 Annual Report and Accounts.

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 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 438 million Vodafone mobile 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 provided incomes, benefits and the potential for a high-technology sector career path for 92,812 people in more than 27 countries as of end March 2014 (2012/13: 91,272). 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 lesser 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. There are also wide variations in local taxation regimes and other government revenue-raising mechanisms, many of which change from year to year. For example, non-taxation-based revenues will typically be very high in a year in which a government benefits from the proceeds of a spectrum auction (as happened in the UK and Netherlands in 2012/13) but much lower in a year where no such auction takes place. It does not make sense, therefore to try and compare the amount of tax or investment made in one country to another, given the factors described above.

Notes:

  1. For example, see CBI – Tax and British Business: Making the Case (pdf, 979 KB)

Total Economic Contribution – country by country

  Direct Revenue contribution: taxation Direct Revenue Contribution: other non-tax Indirect Revenue Contribution Capital Investment Direct Employment1
  FY 13/14
£m
FY 12/13
£m
FY 13/14
£m
FY 12/13
£m
FY 13/14
£m
FY 12/13
£m
FY 13/14
£m
FY 12/13
£m
FY 13/14 FY 12/13
Europe
Albania 5 4 1 1 14 16 25 20 399 420
Czech Republic 10 25 106 9 50 66 67 69 2,040 2,517
Germany 336 106 0 0 1,049 1,068 1,483 1,246 14,187 11,031
Greece 14 25 7 6 169 178 70 66 1,726 2,002
Hungary 14 43 3 61 92 70 45 52 2,616 2,351
Ireland 79 24 0 149 71 92 127 102 1,084 1,115
Italy 520 425 0 12 976 903 963 579 6,977 7,553
Malta 41 37 3 2 9 9 12 26 312 316
Netherlands 82 65 0 1,124 195 233 226 219 3,637 3,467
Portugal 47 65 7 7 115 133 155 129 1,426 1,484
Romania2 25 28 149 195 79 91 80 79 3,232 3,308
Spain 91 172 73 255 288 314 505 367 3,567 4,239
UK 355 275 24 825 630 776 1,310 1,076 12,979 13,479
Total 1,619 1,294 372 2,646 3,738 3,949 5,066 4,030 54,181 53,282
AMAP Region
Australia 6 7 201 26 32 33 255 281 1,651 2,060
DR Congo 26 23 19 16 30 25 57 49 645 606
Egypt 116 108 48 54 155 173 218 211 7,622 5,091
Fiji 0 2 1 1 2 2 3 7 127 120
Ghana 18 6 0 3 34 38 36 36 1,175 1,279
India 254 289 1,088 442 893 986 715 555 16,194 14,449
Kenya 118 80 6 8 20 18 80 12 1,334 1,071
Lesotho 3 5 2 2 2 1 11 8 150 123
Mozambique 3 1 2 0 3 4 78 47 337 284
New Zealand 23 46 9 1 81 78 146 117 3,450 3,271
Qatar 0 1 3 0 0 0 59 69 445 420
South Africa 330 375 19 20 261 318 430 506 4,886 5,118
Tanzania 65 42 10 8 48 40 88 92 509 480
Turkey 296 454 155 0 433 375 252 247 3,310 3,340
Total 1,258 1,439 1,563 581 1,996 2,091 2,429 2,237 41,835 37,712
 
Non-OpCo 4,141 1,466 0 2 65 38 16 11 948 977
 
Global total 7,017 4,200 1,935 3,229 5,798 6,078 7,510 6,278 96,964 91,971

Notes:

The table above includes all contributions from countries within the Group’s Europe and AMAP regions, as set out on page 5 of the Vodafone Group 2014 Annual Report and Accounts. Non-controlled interests and common functions are included within the ‘Non-OpCo’ line, unless the contribution is from a country already listed in the regions above.

  1. The global total direct employment number includes employees in our non-controlled assets who are excluded from the numbers in the Annual Report and excludes some roles in global functions which are included in the Vodafone Group 2014 Annual Report and Accounts. The 2012/2013 direct employment numbers have been restated to include some Group function roles where we are able to allocate these to a specific jurisdiction. We have also restated the Italian 2012/13 direct employment number to reflect 100% ownership of Italy following our acquisition of the remaining 23% in February 2014.

  2. The direct revenue tax contribution: taxation for Romania has been restated to remove a number incorrectly included in the 2012/13 contribution.

‘Non-OpCo’ includes (i) subsidiaries in countries where the Group does not have an equity interest in a company which holds a licence to provide mobile telecommunications services) and (ii) the US group which owned the 45% shareholding in Verizon Wireless prior to the sale of that group as explained earlier in the report

‘Non-OpCo’ includes a direct revenue contribution of £5 million and an indirect revenue contribution of £64 million attributable to our activities in Luxembourg in 2014.

The source data is predominantly drawn from information included within the publicly available Vodafone Group 2014 Annual Report and 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 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 EY.

  • Read about our contribution to public finances

Key Vodafone Group financials and statistics at global level

  2013/14 2012/13
Revenue (£m)1 43,616 44,445
Adjusted operating profit (£m)1 7,874 12,577
Free cash flow (£m)1 4,405 5,608
Employees1 92,812 91,272
Market capitalisation (£m) 58,300 91,300
Group mobile customers (million) 433.7 403.9

Notes:

  1. Values disclosed represent the management basis of presentation as restated in the preliminary results announcement for the year ended 31 March 2014. 2012/13 values have been restated.

For more detailed information about our latest financial performance in 2013/14, see the Vodafone Group 2014 Annual Report and Accounts.

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

Airtime excise tax

Business profits tax

Business rates

Capital gains tax

City services levy

Climate change levy

Commission levy

Communications services tax

Company car tax

Construction tax

Corporation tax

Crisis tax

Donations tax

Economic activity tax

Education tax

Employers' national insurance contributions

Employers Provident fund contribution

Environment tax

Environmental product fee

Expatriate tax

Fringe benefit tax

Fuel duty

Game tax

Garbage tax

Homologation tax

Import duty

Innovation contribution

Insurance premium tax

Interconnect tax

International inbound call termination surtax

Irrecoverable value added tax and goods and services tax

Judicial tax

Levy contributions

Local business tax

Minimum alternative tax

Mobile telecoms services value added tax

Mobile telecoms value added tax (higher rate)

Municipal and city rates

Municipal tax on immovable property

Municipal waste tax

National health insurance levy

Net wealth tax

Numbering tax

PAYE settlements

Railway development levy

Rehabilitation contribution

Social security tax

Special communications tax

Special consumption tax

Sprint payments

Stamp duty land tax

Tax on public domain/fixed lines

Tax on prize programmes

Technology tax

Transfer tax

Turnover tax

Universal service tax

Withholding tax

Workers’ compensation insurance levy

Non-taxation-based fees

Annual government fee

Chamber of commerce fees

Identity management fee

International Mobile Equipment Identity (IMEI) number registration fees

Licence renewal fees

National Copyright Collecting 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