British phone outfit Vodafone is in hot water claiming a colossal £17.67 billion in tax losses that helped its half-year profits rocket.
Vodafone claimed a huge £15.83 billion tax loss from its Luxemburg subsidiary. This particular move has been slammed in the past by anti-tax avoidance campaigners but this time it really does appear to be taking the Nintendo. The idea that Vodafone made losses in Luxemburg is possible, but the fact it lost nearly £33,000 for each person in the tiny principality is unlikely, unless it bet the whole lot on a horse.
Like many of the big multinationals, Vodafone has been telling the world, plus dog, that it is doing nothing illegal and insisted the move "does not change the amount of tax we pay in cash anywhere in the world".
Pre-tax profit in the six months to September was £1.51 billion but the deferred tax losses sent post-tax profit soaring to £15.71 billion.
Vodafone claims it had accumulated the tax losses over many years. The decision to include them now was "triggered" by its £84 billion sale of its 45 percent stake in America's Verizon Wireless.
The chief financial officer Andy Halford told the Independent that accounting rules required him to put a value on the balance sheet because of the Verizon deal.
Vodafone was not trying to avoid corporation tax by claiming the tax losses. "It's nothing to do with it. It's all perfectly above board".
The fact that it gave him a stonking profit this year when he would have had a reasonable one is nothing to do with it.
He said that the losses that have been agreed with the tax authorities and have been disclosed in its annual reports. It puts a value on what has already been there. It does not change the amount of tax Vodafone been paying.
The move has analysts completely baffled. City analysts at investment bank Berenberg said in a note to clients they understood Vodafone's tax bill would fall, "although at present we are not sure we understand why".