Thursday, October 11, 2018

Profits exported to avoid tax

Cadbury  paid no corporation tax in Britain last year, despite reporting profit of more than £185m. In fact, it received a tax credit of £320,000.

The company recorded a 740 per cent jump in profit for the year to 31 December, with turnover rising to £1.66bn from £1.65bn.  A dividend of £247m was paid to its immediate owner, Kraft Foods Schweiz Holdings, which is incorporated in Switzerland.

Mondelez International’s 48 British subsidiaries paid a combined total of £5.9m in corporation tax last year on profits of £1.3bn. Cadbury was bought by Mondelez parent company Kraft in 2010. The takeover was controversial at the time, with staff fearing job cuts - concerns borne out by Kraft’s decision to close the company’s Somerdale factory. Meanwhile, having initially vowed that it would honour the chocolate maker’s commitment to Fairtrade sourcing, Kraft later reneged on that pledge.
Alex Cobham, chief executive of the Tax Justice Network, said Mondelez had carried out “a piece of financial engineering that is very sad given Cadbury’s long history of working to generate value in the communities where they work. Mondelez are stripping value out, by siphoning off taxable profits from the UK through large intra-group dividend payments. It is a problem with international tax rules.”

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