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

Project Coordinator/Order Entry, Security Cleared

£100 - £110 per day + competitive: Orgtel: Project Coordinator/Order Entry Ham...

Senior Digital Marketing Executive

£35000 - £45000 Per Annum: Clearwater People Solutions Ltd: Our client based i...

Junior Developer- CSS, HMTL, Bootstrap

competitive: Progressive Recruitment: A leading company within the healthcare ...

Junior Web Developer- CSS, HMTL

competitive: Progressive Recruitment: A leading company within the healthcare ...

Day In a Page

Read Next
Prime Minister David Cameron walks on stage to speak at The Confederation of British Industry (CBI) annual conference on November 4, 2013  

Does Cameron really believe in 'British Values'?

Temi Ogunye
The Lada became a symbol of Russia’s failure to keep up with Western economies  

Our sanctions will not cripple Russia. It is doing a lot of the dirty work itself

Hamish McRae
Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

A former custard factory, a Midlands bog and a Leeds cemetery

Introducing the top 50 hidden spots in Britain
Ebola epidemic: Plagued by fear

Ebola epidemic: Plagued by fear

How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

From 'Parks and Recreation' to 'Guardians of the Galaxy'

He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star
How live cinema screenings can boost arts audiences

How live cinema screenings can boost arts audiences

Broadcasting plays and exhibitions to cinemas is a sure-fire box office smash
Shipping container hotels: Pop-up hotels filling a niche

Pop-up hotels filling a niche

Spending the night in a shipping container doesn't sound appealing, but these mobile crash pads are popping up at the summer's biggest events
Native American headdresses are not fashion accessories

Feather dust-up

A Canadian festival has banned Native American headwear. Haven't we been here before?
Boris Johnson's war on diesel

Boris Johnson's war on diesel

11m cars here run on diesel. It's seen as a greener alternative to unleaded petrol. So why is London's mayor on a crusade against the black pump?
5 best waterproof cameras

Splash and flash: 5 best waterproof cameras

Don't let water stop you taking snaps with one of these machines that will take you from the sand to meters deep
Louis van Gaal interview: Manchester United manager discusses tactics and rebuilding after the David Moyes era

Louis van Gaal interview

Manchester United manager discusses tactics and rebuilding after the David Moyes era
Will Gore: The goodwill shown by fans towards Alastair Cook will evaporate rapidly if India win the series

Will Gore: Outside Edge

The goodwill shown by fans towards Alastair Cook will evaporate rapidly if India win the series
The children were playing in the street with toy guns. The air strikes were tragically real

The air strikes were tragically real

The children were playing in the street with toy guns
Boozy, ignorant, intolerant, but very polite – The British, as others see us

Britain as others see us

Boozy, ignorant, intolerant, but very polite
How did our legends really begin?

How did our legends really begin?

Applying the theory of evolution to the world's many mythologies
Watch out: Lambrusco is back on the menu

Lambrusco is back on the menu

Naff Seventies corner-shop staple is this year's Aperol Spritz