How does this work then?

Mondelez UK accounts reveal that its turnover rose from £1.64billion to £1.66billion and its profits increased to £185million from £22million. The rise was mainly due to £146million of dividends from two subsidiaries – its Terry’s chocolate business and a coffee business in the Netherlands. This cash offset its profits and helped cut the corporation tax – which is payable on profits – to zero.

Mail butchery there, obviously. But what actually is the allegation? That they received tax paid dividends and then didn’t pay tax on them again?

7 comments on “How does this work then?

  1. Just looked at the accounts. Basically their tax liability is erased because they have a large amount of non-taxable income. Given the resulting tax adjustment of 29.5m, compared to the standard tax charge of 35.5m on their PBT, the amount of non-taxable income is probably slightly smaller in scale to their overall PBT. See note 12 in the accounts.

    That roughly fits the income recorded on dividends from group undertakings (see note 8).

    My guess is that this is to avoid double taxation of profits generated in the Netherlands (both corporate income tax and dividend withholding tax would have already been applied.

    It’s hard to tell exactly because there is more than one subsidiary and one tax rate involved here and so this is just a suggestion, but the numbers seem to be about the right scale.

    But that’s about where my specific knowledge ends.

  2. Oh, there is also some tax relief that come from ‘group relief’, which is smaller but helps the total charge get to zero. That’s basically because they are making losses elsewhere in the group that they have ‘given’ to this company to centralise all the tax in one place. It’s perfectly normal, prevents arcane structures to route profits into loss-making sister entities within the group just so the taxable expenses aren’t lost.

  3. “dividend withholding tax”

    As the Dutch subsidiaries are paying dividends to a UK parent company, it’s unlikely that there would have been any withholding tax. EU parent/subsidiary directive which is pretty much enshrined in the UK/Netherlands tax treaty anyway.

  4. And of course, dividends received by companies are not taxable in the hands of the company.

    McDonnell (I) doesn’t know this which shows he shouldn’t be allowed anywhere near the country’s finances or (ii) knows it and is a mendacious cunt and shouldn’t be allowed anywhere near the country’s finances

  5. ‘Cadbury’s US owners paid ZERO corporation tax in UK despite the sun coming up today.’

    FIFY

    This smells of libel. The insinuation is Cadbury did something wrong.

  6. Mondelez UK accounts reveal that its turnover rose from £1.64billion to £1.66billion and its profits increased to £185million from £22million. The rise was mainly due to £146million of dividends from two subsidiaries – its Terry’s chocolate business and a coffee business in the Netherlands. This cash offset its profits and helped cut the corporation tax – which is payable on profits – to zero.

    A paragraph straight from the Cult of Spud.

  7. Mondelez UK dumped several hundred millions of pounds liability from its pension onto the Cadbury Pension Fund (see note 21). Murphy didn’t notice.
    I, personally, think the Pensions Regulator shoud attach some assets of Mondelez Inc to ensure that it doesn’t default of the resulting £382m deficit on the multiple-employer scheme (the deficit was £574m last year before raiding the Cadbury surplus).

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