Cardbury owners Mondelez International reportedly did not pay a single cent to the UK taxman in 2017 despite recording a 700% hike in profits to £185 million (Ksh24.6 billion) which as per the British tax system should have seen them potentially remit £35 million (Ksh4.7 billion).
British media outlets revealed last week that the Cardbury owners slashed its tax bill by offsetting its profits. The Mirror which reported the news first added that Mondelez “channelled a dividend of nearly £250million (Ksh33.3 billion) offshore to its immediate parent company, headquartered in low-tax Switzerland.”
The company, Mondelez UK Ltd., reportedly managed to do this with the offshoots paying £5.9million (Ksh797 million) combined in corporation tax last year on profits of £1.3billion (Ksh173 billion).
Shadow Chancellor* John McDonell was quoted by The Mirror as saying, “This is outrageous. Time and time again we’ve warned the Government this type of behaviour is unacceptable. We have told them they urgently need to tighten the rules on tax avoidance. This will do nothing but anger people who are going out to work every day, paying their taxes through PAYE. The Government has to act now to crack down on tax avoidance.”
A spokesman for Mondelez, who also own Oreo, told The Mirror, “This is an accounting item and is not a tax or cash credit. In common with all global businesses, we pay corporation tax based on the laws of the countries in which we operate.”
This is not the first time that the Cardbury owners are facing the controversy of offsetting profits abroad from the UK, with a Sunday Times investigation in 2015 also discovering that Mondelez had not paid corporate tax in 2014. The arrangement, which sees the company pay off Cardbury’s tax by offsetting it to gains made elsewhere in the company, was deemed legal.
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*UK Shadow Chancellor of the Exchequer is the opposition member of the shadow cabinet who shadows the Chancellor of the Exchequer, the British Minister in charge of Finance.
