Cadbury owner Mondelez and the incredible shrinking corporation tax
Cadbury owner Mondelez has come under fire over arrangements which enable it to pay no corporation tax in the UK.
The legal but controversial scheme allows the company to report losses in the UK, despite millions of pounds of revenue and global profits of billions.
Under a "quoted Eurobond exemption" rule, the company makes interest payments on an unsecured £8.2bn debt listed as a bond on the Channel Islands stock exchange, the Sunday Times reports. This is offset as a loss to its UK business.
“Multinationals like this are deliberately exporting their profits with artificial company structures to avoid tax. The founders of Cadbury who set it up as an ethical company will be turning in their graves,” said the chair of the public accounts committee Margaret Hodge.
A Mondelez spokesperson hit back at length: "In common with all global businesses, we pay corporation tax based on the laws of the countries in which we operate. We comply with all applicable tax legislation in the UK, and on a global basis we pay hundreds of millions of dollars in corporate income tax annually.
"Since 2010 we are proud to have invested over £200m into both UK-based manufacturing and R&D supporting our 4,500 employees in the UK. Importantly, independent academic research has also shown that as a business we are worth over £1.06billion to the wider UK economy, illustrating our impact reaches far beyond the factory gates.
“These results highlight the significant contribution that businesses such as Mondelez International make to the UK economy, both through direct spending on employees and suppliers, and through the recirculation of that expenditure in the wider economy. As a contributor to the UK economy, we are committed to investing in the UK as a strategic hub for our people and our business for the future.”
The UK government has outlined plans to crack down on tax avoidance schemes used by multinational firms amid greater global efforts to bring tax standards into line across borders.
In recent years the government has cut corporation tax from 28 per cent to 20 per cent, with another cut to 18 per cent by 2020 announced in the chancellor’s July Budget.
The cut retains the UK’s position as holding the lowest rate of corporation tax in the G20.
“[This is] sending the message out around the world, loud and clear, that Britain is open for business,” said Osborne.