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: Creative Web and UI Designer

£30000 - £35000 per annum: Recruitment Genius: An experienced creative web and...

Recruitment Genius: Web Developer - PHP

£17000 - £24000 per annum: Recruitment Genius: An exciting opportunity is now ...

Recruitment Genius: Account Executive - Graduate / Entry Level

£22000 - £27500 per annum: Recruitment Genius: This digital advertising infras...

Recruitment Genius: European Sales Director - Aerospace Cable & Wire

£100000 - £125000 per annum: Recruitment Genius: As a top tier supplier to the...

Day In a Page

Read Next
 

Caitlyn Jenner's first shoot is a victory - but is this really best version of femininity we can aspire to?

Sirena Bergman
The sun balances next to St Albans Church in Earsdon, North Tyneside.  

The world’s nations have one last chance to slow climate change

Michael McCarthy
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific
In this the person to restore our trust in the banks?

In this the person to restore our trust in the banks?

Dame Colette Bowe - interview
When do the creative juices dry up?

When do the creative juices dry up?

David Lodge thinks he knows
The 'Cher moment' happening across fashion just now

Fashion's Cher moment

Ageing beauty will always be more classy than all that booty
Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination

Health fears over school cancer jab

Shock new Freedom of Information figures show how thousands of girls have suffered serious symptoms after routine HPV injection
Fifa President Sepp Blatter warns his opponents: 'I forgive everyone, but I don't forget'

'I forgive everyone, but I don't forget'

Fifa president Sepp Blatter issues defiant warning to opponents
Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report

Weather warning

Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report
LSD: Speaking to volunteer users of the drug as trials get underway to see if it cures depression and addiction

High hopes for LSD

Meet the volunteer users helping to see if it cures depression and addiction
German soldier who died fighting for UK in Battle of Waterloo should be removed from museum display and given dignified funeral, say historians

Saving Private Brandt

A Belgian museum's display of the skeleton of a soldier killed at Waterloo prompts calls for him to be given a dignified funeral