Vodafone Group Plc announced that it has increased the sum set aside against a potential United Kingdom tax liability to £1.8 billion from £1.4 billion, relating to a dispute with the UK tax authorities over the profits of its Luxembourg unit.
Vodafone, Europe's largest mobile telephone operator, is contesting a claim by the UK's Revenue and Customs department that its holding company, Vodafone Investments Luxembourg, must pay corporate tax in the United Kingdom.
The claim relates to income earned in the year to the end of March 31, 2001.
The case has been referred to the European Court of Justice, but a decision is not expected until mid-way through 2006 at the earliest.
The firm revealed that it took the decision to increase the provision after an increase in its profits over fiscal 2005.
A comprehensive report in our Intelligence Report series looking at offshore and onshore corporate structures and their tax implications is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report7.asp
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