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We recognise and value the benefits for society that arise from fair, effective and predictable tax regimes. We are committed to acting with integrity, honesty and transparency in all matters related to tax and ensure we adhere to the highest standards of corporate governance.

Our 2016-17 Report

Our Report sets out our total contribution to public finances in all our countries of operation for the financial year 1 April 2016 to 31 March 2017 and contains new information, including:

  • the amount of corporate taxes we pay, split out as a subset of the total direct taxes we pay, by country;

  • our views on the challenges of the global digital economy for tax authorities; and

  • more information on our operations in emerging economies.

This information supplements our existing disclosures on our contributions to public finances, which we publish for every country in which we have a legal entity.

Following the submission of our country by country report to HMRC under the OECD BEPS programme, we are committing to publishing that submission – with supporting explanations – in the next iteration of this report in early 2019.

In our sixth report, for the financial year 2016-17, we set out our total contribution to public finances on a cash-paid, country by country basis.

Our total economic contribution

In 2016-17, our total contribution to governments’ public finances of €14.2 billion consisted of:

Non-tax-based fees3.7 billionIndirect taxes7.5 billionDirect taxes3.0 billion

Our business

In 2016-17, our turnover was €47.6 billion, on which we made a profit before tax of €2.8 billion.

516 million mobile customers

17.9 million fixed broadband customers

31 million mobile money customers

€7.7 billion invested in our network and services

108,271 employees employed worldwide

Woman looking at her phone

Vodafone’s contributions, country by country

We’re a multinational company operating directly in 26 markets1, with legal entities undertaking enterprise or other activities in 35 more.

Tax systems are complex and confusing and can lead to an erosion of public trust

We believe that increasing transparency and improving understanding of tax systems is vital to help address this issue.

In our view, it is possible to achieve an effective balance between a company’s responsibilities to society as a whole and its obligations to its shareholders. However, it has become increasingly difficult to persuade the wider public that companies can balance their obligations in this way.

Some of the common misconceptions that are often a source of confusion and can drive public misunderstanding include:

Corporation tax is not the same as all the taxes paid by a company.

We pay more than 85 different corporate taxes a year; corporation tax is just one of them.

Most corporate taxes are paid on profits not revenue.

This helps to avoid disproportionate tax demands when profits are low, which can severely damage businesses.

Taxation is local.

Taxes generally fall where profits are generated and are determined by the local laws in place in that location. Last year, globally we paid a total of €3.0 billion in direct taxes.

Taxation is just one way that governments raise revenue from businesses.

Taxation is not the only route used by governments to raise revenue from businesses; licensing agreements, production-sharing agreements and spectrum fees and auction proceeds are just some of the other mechanisms used. Last year, we paid €3.7 billion of non-tax-based fees to governments.

Tax incentives can be used to stimulate employment and investment.

These incentives are not loopholes but part of government strategies to stimulate and attract inward investment. Last year, we invested €7.7 billion in networks and services relied on by our customers around the world.

Why does Vodafone pay little or no UK corporation tax?

Vodafone makes large investments in the UK and in 2016-17 spent over €1.4 billion building and upgrading the networks and services relied on by millions of people; it also pays more than €600 million a year in interest to UK banks. Our total contribution to the UK government was €1 billion. The UK government allows companies to claim tax (and other) reliefs on capital investments they make in the UK, to stimulate investment and encourage job creation, and to claim tax relief on interest costs.

Vodafone, Luxembourg and ‘tax havens’

Vodafone has a significant presence in Luxembourg, a country that has been the focus of much scrutiny. Our subsidiaries there are not ‘brass plate’ and play a central role in managing some of the most important aspects of our global operations, including our centralised procurement, financing and roaming activities.

Many governments choose to develop tax regimes that offer multinational companies some form of competitive advantage in order to attract inward investment. As a result of the variations between the tax regimes of different countries, some countries have found themselves called ‘tax havens’.

We provide a full list of all legal entities we own and operate in each country and in none of these (or in any other location) do we enter into the kind of artificial arrangements that are of concern to the European Commission and many others.

The city of Luxembourg

References

  1. Includes Qatar