Vodafone tax issue results in protests, arrests
On Saturday, around 20 Vodafone stores around the UK were forced to close due to protests over the company's tax affairs.
The protests, which took place in London, Brighton, Bristol, Edinburgh, Glasgow, Hastings, Liverpool, Manchester, Oxford and York and led to some arrests, centred on tax owed from Vodafone's €180bn purchase of the German engineering firm Mannesmann ten years ago.
According to an investigation by Private Eye, after the coalition government came in, the telco settled a long-running tax argument with HM Revenue & Customs for "£800m, with another £450m payable over five years and, remarkably, an agreement that the arrangement [letting Vodafone conduct its affairs through the tax haven of Luxembourg] can carry on into the future with a promise of no challenge from HMRC".
Private Eye, which notes that Vodafone tax chief John Connors worked at HMRC until 2007, reckons Vodafone should have paid a further £6bn in the UK for the Mannesmann transaction, and it is this figure that has been seized upon by the campaigners. Vodafone and HMRC both claim the £6bn figure is a myth and was never being mooted by HMRC in the first place.
Given the context of the cuts facing the UK — welfare is being cut by £7bn — it seems unlikely that the disquiet over Vodafone's alleged underpayment will disappear anytime soon. Some, such as the comedian Marcus Brigstocke, are even calling for a boycott of the telco.
But how realistic is a boycott of a firm like Vodafone, particularly in the context of the sudden but short-lived bursts of activism that are engineered through social media such as Facebook and Twitter (where Saturday's protests were organised, although they translated into real-world sit-ins)? Phone contracts are getting longer and longer, which makes it very hard to stop using the company's service unless you're at the end of your contract. Anyway, all large corporations try to keep their tax payments as low as humanly possible — it's what they do.
Whether Vodafone's bottom line takes a hit remains to be seen — a separate bill for $2bn in India won't help — but, at the very least, the company's brand has been damaged. It appears the economic crisis can take its toll on tech companies in multiple ways.