Our economic contribution, country by country

This report was first published in December 2013 and the next version will be available in December 2014 on our corporate website.

Vodafone plays an important role in helping to develop the economies of the countries in which we operate. We are a major investor, taxpayer, employer and purchaser of local goods and services. We also make a vital contribution to the delivery of governments’ policy objectives through our substantial capital expenditure in building the next generation of digital infrastructure.

We contribute directly to public finances through a wide range of taxes, as well as non-taxation revenue mechanisms, such as licence and regulatory fees. We also make a significant indirect contribution through the taxes paid by our employees and the suppliers that our businesses support (many of which are effectively dependent on the fact that we do business in the country in question), as well as through taxes collected on governments’ behalf, such as sales taxes and VAT.

Assessing our contribution to public finances

The following table sets out the data for five of the most relevant indicators of Vodafone’s total overall contribution to the public finances and wider economies within which we operate.

Certain data is only gathered and reconciled some time after the end of the previous financial year, for example, in relation to some non-taxation-based fees paid to national governments. Therefore, to ensure the most effective comparisons between different types of contribution within the same period, all the data presented in the table below is for the 2012/13 financial year and is drawn from our audited accounts.

In the 2012/13 financial year, Vodafone’s businesses around the world paid more than £4.2 billion in direct taxes to governments in our countries of operation, plus more than £3.2 billion in other non-taxation-based fees and levies. Our businesses also made a total indirect tax contribution to national governments of £6.1 billion. Our total cumulative contribution to the public finances of our countries of operation was therefore more than £13.5 billion. We also invested more than £6 billion in the networks and services now relied upon by more than 400 million customers worldwide.

In the table below, the direct tax contributions to governments are reported on an annual actual cash paid basis for each local market as, in our view, these are among the most meaningful and transparent metrics to consider when assessing a company’s tangible role in helping to fund public services. International accounting rules governing the reporting of a multinational company’s profit and loss tax liabilities and charges are complex, reflecting a wide range of factors such as deferred taxation, losses, group-level taxation and various provisions related to uncertain tax positions. The cash payments or reliefs arising from those factors may be several years in the future. As a result, there can be a variance between a multinational company’s statutory reported numbers over a specific time period – particularly in territories with holding companies as well as a local operating company – and the actual cash paid numbers set out below1.

For more detailed information about our financial performance in 2012/13, see our Annual Report.

The columns in the table are explained below.

  • Direct government revenue contribution: taxation. This encompasses Vodafone’s total direct tax contribution in each country, including corporation tax, business rates or equivalent, employers’ national insurance contributions or equivalent, municipal and city taxes, sector-specific taxes (such as ‘special’ taxes, ‘telecoms’ taxes or ‘crisis’ taxes), stamp duty land tax, stamp duty reserve tax, irrecoverable Value Added Tax (VAT), insurance premium tax, climate change levy, environmental taxes, customs duties, fuel excise duties, vehicle excise duty and acquisition taxes. An illustrative list of the types of taxes paid is set out in the Appendix.

  • Direct government revenue contribution: non-taxation mechanisms. This encompasses all other forms of government revenue raised in addition to a country’s direct taxation regime, including telecoms licence fees, radio spectrum management fees, proceeds from revenue-sharing agreements, usage fees and proceeds from radio spectrum auctions. Examples of these payment types are listed in the Appendix.

  • Indirect government revenue contribution. This encompasses taxes collected by companies on behalf of national governments, including Pay As You Earn (PAYE) income tax, employees’ national insurance contributions, withholding taxes, sales and consumption taxes and VAT. These indirect contributions to government revenue would not be collected (or generated to the same extent) if the company did not employ people and offer services or products to the customers responsible for paying the tax in question, or procure goods and services from its suppliers on which such taxes are due.

  • Capital investment. Our significant investments in building the networks and services relied upon by more than 400 million Vodafone customers around the world are often taken into account by local tax authorities when determining corporate tax liabilities.

  • Direct employment. Vodafone is an important source of employment and skills transfer worldwide. We provide incomes, benefits and the potential for a high-technology sector career path for 91,272 people in more than 30 countries as of end March 2013 (2011/12: 86,373). In addition, we have contractual relationships with many thousands of suppliers and partner companies around the world, each of which relies to a greater or lesser extent on revenues from Vodafone to pay their employees’ wages.

This data is intended to provide a broader insight into Vodafone’s significant economic contribution to the societies in which we operate. We have no view on the merits of direct versus indirect taxation, nor on the distinction between the revenues that flow to governments from taxation versus those obtained through other means, such as spectrum fees. Governments – not companies – determine the rules.

The figures set out in the table below will vary widely from country to country and from year to year as a result of local differences between, and annual movements in, factors such as levels of profit and capital investment. There are also wide variations in local taxation regimes and other government revenue-raising mechanisms, many of which change from year to year.

Total Economic Contribution – country by country

  Direct Revenue contribution: taxation Direct Revenue Contribution: other non-tax Indirect Revenue Contribution Capital Investment Direct Employment
  FY 12/13
£m
FY 11/12
£m
FY 12/13
£m
FY 11/12
£m
FY 12/13
£m
FY 11/12
£m
FY 12/13
£m
FY 11/12
£m
FY 12/13 FY 11/12
Global total 4,239 3,379 3,229 1,865 6,078 5,982 6,278 6,412 86,1386 82,3556
Europe1
Albania 4 6 1 1 16 12 20 22 420 438
Czech Republic 25 43 9 8 66 74 69 85 2,517 2,974
Germany 106 160 0 0 1,068 892 1,246 1,044 11,088 12,115
Greece 25 25 6 6 178 217 66 78 1,756 2,1225
Hungary 43 33 61 0 70 45 52 55 1,454 1,543
Ireland 24 22 149 8 92 84 102 117 1,081 1,122
Italy 425 668 12 1,069 903 1,333 579 653 5,750 5,838
Malta 37 5 2 2 9 6 26 9 312 312
Netherlands 65 43 1,124 0 233 217 219 243 3,456 3,034
Portugal 65 71 7 91 133 149 129 151 1,484 1,505
Romania 68 64 195 13 91 92 79 80 3,308 3,515
Spain 172 225 255 71 314 334 367 429 4,223 4,379
UK 275 338 825 21 776 523 1,076 767 7,850 8,151
Total 1,334 1,703 2,646 1,290 3,949 3,978 4,030 3,733 49,4693 47,151
AMAP Region2
Australia 7 7 26 26 33 49 281 347 2,060 2,656
DR Congo 23 54 16 5 25 3 49 24 606 585
Egypt 108 100 54 57 173 170 211 209 5,091 4,4254
Fiji 2 1 1 0 2 2 7 4 120 114
Ghana 6 6 3 2 38 46 36 57 1,279 1,392
India 289 257 442 414 986 802 555 815 11,996 11,234
Kenya 80 98 8 29 18 92 12 71 2,666 2,701
Lesotho 5 6 2 2 1 2 8 7 123 131
Mozambique 1 1 0 0 4 3 47 45 284 236
New Zealand 46 57 1 1 78 57 117 106 2,531 1,922
Qatar 1 0 0 1 0 0 69 69 420 378
South Africa 375 374 20 18 318 291 506 603 5,118 5,147
Tanzania 42 16 8 1 40 31 92 43 480 477
Turkey 454 299 0 19 375 446 247 266 3,340 3,312
Total 1,439 1,276 581 575 2,091 1,994 2,237 2,666 36,114 34,710
 
Non-OpCo 1,466 400 2 0 38 10 11 13 600 494

Notes:

The table above includes all contributions from countries within the Group’s Europe and AMAP regions, as set out on page 5 of the Group’s 2012/13 Annual Report. Non-controlled interests and common functions are included within the ‘Non-OpCo’ line, unless the contribution is from a country already listed in the regions above.

  1. Europe is now a combination of N&CE Europe and SE Europe, with the exception of Turkey which has moved to AMAP region
  2. AMAP now includes Turkey, which was originally in N&CE region, along with Australia and Fiji, which are new countries to be included in this edition
  3. The total figure for Europe includes 4,524 Cable and Wireless employees that cannot be apportioned by country
  4. Egypt – the 11/12 figure was under-reported – it is corrected here (an increase of 41 people)
  5. Greece – the 11/12 figure was over-reported – it is corrected here (a decrease of 103 people)
  6. The global total direct employment numbers do not include some roles in global functions and some joint venture/non-controlled assets

‘Non-OpCo’ includes (i) subsidiaries in countries where the Group does not have an equity interest in a company which holds a licence to provide mobile telecommunications services’) and (ii) the US group which owns the 45% shareholding in Verizon Wireless.

‘Non-OpCo’ includes a direct revenue contribution of £17 million and an indirect revenue contribution of £29 million attributable to our activities in Luxembourg in 2013.

The source data is predominantly drawn from information included within the publicly available Vodafone Group Annual Report, the public accounts of the Group’s listed operating company subsidiaries and the accounts of various non-listed Group operating company subsidiaries. The Vodafone Group public accounts are certified by the Group’s external auditors Deloitte and the public accounts of the Group’s listed operating company subsidiaries are certified by those companies’ external auditors. Additional data is subject to assurance by EY, in line with the approach taken for other metrics disclosed in this Sustainability Report.

Key Vodafone Group financials and statistics at global level

  2010/11 2011/12 2012/13
Revenue (£m) 45,884 46,417 44,445
Adjusted operating profit (£m) 11,818 11,532 11,960
Free cash flow (£m) 7,049 6,105 5,608
Market capitalisation (as at 31 March) (£m) 91,034 85,490 91,300
Group customers (million) 370.9 404.7 403.9

For more detailed information about our latest financial performance in 2012/13, see our Annual Report.

Appendix: Taxation types

The table below provides an illustrative overview of the types of taxation paid by Vodafone operating companies around the world every year.

Direct taxation

Advertisement tax

Air passenger duty

Airtime excise tax

Business rates

Capital gains tax

Climate change levy

Commission levy

Communications services tax

Construction tax

Corporation tax

Customs duty

Donations tax

Economic activity tax

Education tax

Employers’ national insurance contributions

Environment tax

Excise duty

Expatriate tax

Fuel duty

Garbage tax

ICA/turnover tax

Import duty

Insurance premium tax

Interconnect tax

International inbound call termination surtax

Irrecoverable VAT

Judicial tax

Mobile telecoms services VAT

Mobile telecoms VAT (higher rate)

Municipal and city rates

Municipal tax on immovable property

Municipal waste tax

National health insurance levy

Numbering tax

PAYE settlements

Site rental tax

Social security tax

Special communications tax

Special consumption tax

Sprint payments

Stamp duty land tax

Stamp duty reserve tax

Tax on public domain/fixed lines

Technology tax

Universal service tax

Vehicle excise duty

Withholding tax

Workers’ compensation insurance levy

Non-taxation-based fees

Chamber of commerce fees

IMEI number registration fees

Licence renewal fees

National Copyright Collecting (SIAE) fees

Network usage fees

Proceeds from revenue-sharing agreements

Radio link fees

Spectrum auction receipts

Spectrum management fees

Telecoms levy

Telecoms licence fees

Usage fees

Wireless connection fees

Wireless usage fees