Cadbury's owner paid no corporation tax in 2014
Mondelez avoids tax despite £96.5m profit
The Guardian reported on 6th December 2015 that food company Mondelez was able to pay no UK corporation tax as a result of a Channel Islands-based bond, despite its subsidiary Cadbury making £96.5m profit in 2014.
An investigation by the Sunday Times found that Mondelez had been wiping out Cadbury’s bills using interest payments on an unsecured debt, which was listed as a bond on the Channel Islands’ stock exchange. The interest paid on the loan was able to be offset as a loss against gains made elsewhere in the company.
The arrangement, which was acknowledged to be legal, meant Mondelez was able to pay no UK corporation tax despite accounts showing that Cadbury UK, its subsidiary, made profits of £96.5m in 2014 and £83.6m in 2013.
Margaret Hodge, chairwoman of the Commons all-party group on responsible tax, told the Sunday Times:
“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.”
Kraft Foods bought Cadbury in 2010 in a deal worth more than £11bn, and renamed its international snacks sector Mondelez. A report by the Financial Times at the time of the purchase claimed Cadbury had tax avoidance schemes ready when it was bought by the multinational, saying the chocolate-maker had a system of loans in place that allowed it to reduce its UK tax bill to just £6.4m a year on a profit of £100m.
A Mondelez spokesperson said:
“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. Since 2010 we are proud to have invested over £200m into both UK-based manufacturing and R&D supporting our 4,500 employees in the UK."
Mondelez claimed it had invested £75m in four new lines at its Bournville site and that research showed that for every £1 it spent in the UK, a further £1.42 was generated in the UK economy. However, soon after the takeover of Cadbury, Kraft announced it would close a plant in Bristol with the loss of 400 jobs, despite pledging before the deal that it would keep it open, and early in 2015 it announced that 250 jobs would be lost at its Bournville plant.
See our guide to chocolate and boxes of chocolate for alternatives to Cadbury.
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