Written by: Keith Tully
Published: 7th December 2015
The company that owns the British confectionery business Cadbury hasn’t paid corporation tax in the UK since taking over the operation in a controversial £11.5 billion deal in 2010.
Mondelez International, formerly known as Kraft Foods, has been able to effectively wipe out its UK tax bill by taking advantage of tax breaks relating to interest paid to foreign investors.
The international corporation has been able to legally avoid paying taxes in the UK by using holding companies to manage Cadbury operations and by listing bonds on the Channel Islands Securities Exchange.
The use of these bonds allowed Mondelez to create tax losses that could then be used to offset gains made elsewhere in its business in a way that meant it could avoid paying taxes in the UK.
Numerous British politicians have expressed concerns about Mondelez’s tax planning tactics and the Labour Party pledged in the run up the 2015 general election to eliminate the exception that allows it to avoid paying UK corporation taxes.
A recent investigation into Mondelez’s financial affairs by the Sunday Times revealed that the company pays no corporation tax in Britain despite its Cadbury UK subsidiary generating profits worth £96.5 million in 2014 and £83.6 million in 2013.
Margaret Hodge, who chairs the House of Commons’ all-party group on responsible tax, told the newspaper: “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.”
According to the Financial Times, relatively little tax was paid by Cadbury even in the decade before it was acquired in 2010, with the UK confectionery business only paying an average of £6.4 million each year in taxes despite typically generating around £100 million in profits on an annual basis.
A spokesperson for Mondelez International said in a statement: “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.”
13th January 2021
Retailers in the UK endured what was statistically their worst year on record in terms of sales growth during 2020.Read More
11th January 2021
As many as 250,000 small firms could close this year unless government action is taken to prevent such a scenario from happening.Read More