The group head of tax at Vodafone has said that tax avoidance is 'very rare' among multi-nationals, and that tax agencies can become too obsessed with the issue.
In an interview with the Chartered Institute of Taxation and The Association of Taxation Technician's journal Tax Adviser, Joel Walters said: 'There is a danger, I think, that multi-national corporations in particular are perceived as avoiding tax in respect of how they structure their operations, and the first thing I'd say is that tax avoidance, defined as not paying the amount of tax the law requires, is actually very rare.'
He added that it was also 'very rare' for tax to drive the business decisions of multi-nationals.
The big numbers involved in tax mean a perception is created that there are big problems. 'That creates an illusion that there are significant numbers of issues. Then I'm concerned to some extent that once this perception begins to permeate the taxing agency, what tends to happen is that the focus comes on enforcing the tax loss in response to what, I think, is largely overestimated tax avoidance, and all the effort goes on enforcement in those areas.'
Vodafone has been at the centre of some of the biggest tax issues in terms of value in recent years. It is involved in a £2bn dispute with HM Revenue & Customs over a Luxembourg subsidiary created to facilitate the Mannesman merger in 2000, and faces a separate action in India too.
Tax issues are about integrity, Walters said: 'A corporation, and individual tax people, must feel that they are comfortable with the actions they have taken and the way they have gone about doing their business.'
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