| THE UK tax authorities and Vodafone have chosen conciliation over
clash.
International telecom giant, Vodafone has finally decided to settle its
long pending tax dispute with UK authorities over its foreign earnings by
shelling out £1.25 Billion over five years.
The
dispute related to Britain’s controversial rules for controlled foreign
companies (CFC) meant to stop companies avoiding taxes by using subsidiaries in
countries with lower tax rates. The policy was criticised for driving away
multinationals from UK. The dispute, pending for the last 10 years, involved
Vodafone’s Luxembourg unit.
According to a statement from Vodafone, the settlement would clear all
outstanding CFC issues from 2001 to date and no further UK CFC tax liabilities
would arise in the near future under current legislation. Under the settlement,
Vodafone would make a payment of £ 800 million in the current financial year
with the balance to be paid in instalments over the next five years.
The
CFC rules are also expected to be reviewed by the new Government.
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