Cantillon: Vodafone joins the tax debate

If there’s something strange, and it looks too good; who you gonna call?

Well, it has now emerged that Her Majesty's Customs and Revenue contacted Vodafone, the UK based telecommunications giant, following some frightening behaviour at its former Irish off-shoot Vodafone Ireland Marketing Ltd – catapulting it to the front of the international community's intermittent attacks on Ireland's tax regime.

If, like Google and Apple before, you are a multinational which is not being grilled about your tax affairs here then, from a business perspective, you may well face a grilling from shareholders as to why you are not managing your tax affairs correctly. Vodafone, it emerged this week, is the latest corporate giant to benefit from Ireland's lower rate, having used that platform to assist it with sending over €1 billion in dividends to the low tax regime in Luxembourg.

In 2009 it settled with HMCR for an undisclosed sum based on Irish returns that should have been paid in the UK, which included taking back €67 million paid to the Revenue Commissioners, a facility allowed for by the nations’ double taxation treaty.

Like everyone else, Vodafone was entirely compliant with the law, but it is this law, and its seeming flexibility, that continues to vex so many.

Earlier this year we heard the US Subcommittee on Permanent Investigations say that Ireland's dealings with Apple met a "common sense" definition of a tax haven. Similar fingers have been pointed at Google, which developed technology that allowed customers around the world to pitch for advertising in an ongoing, online auction. In this global context, it had the right to sell advertising from Dublin to clients based in Europe, the Middle East and Africa.

The substantial fees involved in this process are then paid to a Google subsidiary in Bermuda.

Whatever taxation rules are used by multinationals, it seems highly unlikely we have heard the last of the cries of outrage – faux or not – against our tax regime.