Vodafone's wireless windfall

The mobile phone operator's mega-deal will boost the economy

Share

Vodafone’s £84bn sale of its stake in a US mobile network may not be the biggest deal in history – in fact, the company’s takeover of Germany’s Mannesmann in 2000 is – but the company offloading its 45 per cent share of Verizon Wireless is still a hefty transaction. It also threatens to provoke another row about the looking-glass world of corporate taxation.

The issue shot up the agenda thanks to revelations about the service companies, royalty transfers and intra-group debts that leave big-name multinationals legally paying minimal UK taxes. The likes of Starbucks, Amazon and Google have all come under scrutiny.

This time, however, the situation is even trickier; this time the company is British. Vodafone’s mammoth deal might be expected to generate sizeable capital gains taxes for the Exchequer. Yet it appears that the company will pay only a paltry $5bn charge in the US, and nothing in Britain at all. No wonder that Margaret Hodge, the vociferous chair of the Public Accounts Committee, is calling for a review of the relevant rules. She is right to do so.

The favoured explanation for Vodafone’s tax-lite deal is so-called “substantial shareholder exemption” allowing a company selling a chunk of another’s shares to avoid CGT – a rule that was introduced, in 2002, to ensure that Britain did not lose out to competitors such as Luxembourg and Switzerland. All of which only illuminates, once again, the race to the bottom that global corporate taxation has become.

There is some good news, though. With a considerable portion of the sale’s proceeds to be passed on to shareholders, many of them here, Britain is set for a windfall running to tens of billions of pounds – enough to give a tangible boost to the economy.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Recruitment Genius: Sales Executives - OTE £60,000

£25000 - £60000 per annum: Recruitment Genius: Are you passionate about Custom...

Recruitment Genius: Care Workers Required - The London Borough of Bromley

£15000 per annum: Recruitment Genius: This homecare agency is based in Beckenh...

Recruitment Genius: Sales Executives - OTE £50,000

£25000 - £50000 per annum: Recruitment Genius: Are you passionate about Custom...

Recruitment Genius: Sales Executives - OTE £50,000

£25000 - £50000 per annum: Recruitment Genius: Are you passionate about Custom...

Day In a Page

Read Next
Polish minister Rafal Trazaskowski (second from right)  

Poland is open to dialogue but EU benefits restrictions are illegal and unfair

Rafal Trzaskowski
The report will embarrass the Home Secretary, Theresa May  

Surprise, surprise: tens of thousands of illegal immigrants have 'dropped off' the Home Office’s radar

Nigel Farage
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas
La Famille Bélier is being touted as this year's Amelie - so why are many in the deaf community outraged by it?

Deaf community outraged by La Famille Bélier

The new film tells the story of a deaf-mute farming family and is being touted as this year's Amelie
10 best high-end laptops

10 best high-end laptops

From lightweight and zippy devices to gaming beasts, we test the latest in top-spec portable computers
Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

The batsman has grown disillusioned after England’s Ashes debacle and allegations linking him to the Pietersen affair
Susie Wolff: A driving force in battle for equality behind the wheel

Susie Wolff: A driving force in battle for equality behind the wheel

The Williams driver has had plenty of doubters, but hopes she will be judged by her ability in the cockpit
Adam Gemili interview: 'No abs Adam' plans to muscle in on Usain Bolt's turf

'No abs Adam' plans to muscle in on Usain Bolt's turf

After a year touched by tragedy, Adam Gemili wants to become the sixth Briton to run a sub-10sec 100m
Calls for a military mental health 'quality mark'

Homeless Veterans campaign

Expert calls for military mental health 'quality mark'
Racton Man: Analysis shows famous skeleton was a 6ft Bronze Age superman

Meet Racton Man

Analysis shows famous skeleton was a 6ft Bronze Age superman
Garden Bridge: St Paul’s adds to £175m project’s troubled waters

Garden Bridge

St Paul’s adds to £175m project’s troubled waters
Stuff your own Christmas mouse ornament: An evening class in taxidermy with a festive feel

Stuff your own Christmas mouse ornament

An evening class in taxidermy with a festive feel
Joint Enterprise: The legal doctrine which critics say has caused hundreds of miscarriages of justice

Joint Enterprise

The legal doctrine which critics say has caused hundreds of miscarriages of justice
Freud and Eros: Love, Lust and Longing at the Freud Museum: Objects of Desire

Freud and Eros

Love, Lust and Longing at the Freud Museum