Quote cod'ead="cod'ead"I thought you knew that the British Virgin Isles is the world's leading supplier of Value Baked Beans. Tesco buy them from there and then sell them at a great loss to the undeserving British consumer.
Prior to the Pepsico takeover of Walkers Crisps, Walkers would buy potatoes from British farms, slice and fry them, add flavours, bag them and sell them to British supermarkets and would then pay corporation tax on their profits.
These days the same Walkers crisps factories now buy their potatoes from a Swiss subsidiary, even though the Swiss subsidiary still buys the potatoes from the same British farms. The Walkers factory then processes the potatoes and sells the crisps to another Swiss-based Pepsico subsidiary, this second subsidiary then sells the crisps to British supermarkets and the Walkers factory no longer pays any corporation tax because they no longer make a profit.
Anyone seriously expect Gideon to change anything here?'"
Cod’ead, I’m going to go all corporate on you again here!
Tesco are the third largest retailer in the world (by revenue), and operate in many countries. However, unlike businesses such as Amazon and Starbucks, corporation tax (or country equivalent) is paid in a number of countries depending where profit – or loss – is made.
Tesco worldwide revenues in 12/13 excluding VAT were £65 billion. Worldwide trading profit before tax was about £3.5 billion. The UK represents around 66% of both revenue and trading profit.
Total Group tax was paid on profit before tax prior to any one-off charges - tax paid in the UK was about £350m, and tax paid overseas was about £230m
One-off charges in 12/13 were big: pulling out of the US, writing down UK property values, etc, meant that about £1.6 billion was taken from trading profits, meaning statutory profit of just under £2 billion.
If you look at percentage of tax paid on trading profit, you’ll see that it equates to approx. 16.6% worldwide. If you look at tax on statutory profit, it’s approx. 29%.
As a multinational retailer, Tesco are obviously successful. They are making around a 5% profit on revenues. Compare this to some large multinational manufacturers: businesses such as P&G, Unilever, etc consistently achieve 12%-15% profit. General retail really is a low margin, high volume business - scale is the only way to get shareholder returns.
