The bitter aftertaste of Cadbury’s tax strategy

The bitter aftertaste of Cadbury’s tax strategy

The bitter aftertaste of Cadbury’s tax strategy Owners of world-renowned chocolate brand, Cadbury, are under scrutiny for not paying taxes despite the fact their operations are legal.
 
Mondelez, the American multinational confectionery, food and beverage conglomerate, failed to pay its UK corporation tax last year according to an investigation by British newspaper, The Sunday Times.
 
The newspaper claimed that the company was wiping out Cadbury’s bills using interest payments on an unsecured debt.
 
While the methods are technically above board and legal, the owners of the chocolate brand face scrutiny despite the fact that the company pays taxes elsewhere. While Cadbury is distributed worldwide and owned by an American company, it remains a British company but has been able to side step British tax despite the UK showing significant profits of £96.5m.
 
Speaking to the Sunday Times, Margaret Hodge, chairwoman of the Commons all-party group on responsible tax, claimed the company’s original founders would not be happy.
 
“Multinationals like this are deliberately exporting their profits with artificial company structures to avoid tax. The founders of Cadbury who set it up as an ethical company will be turning in their graves.”
 
Cadbury’s operates in both the US and Canada as well as several other countries.
 
Mondalez, one of the world’s largest snack companies, bought the British brand Cadbury in 2010 for £11.9b.
 
Cadbury was founded in Birmingham and has been producing some of the world’s most enjoyed chocolate products since 1824 while distributing them across more than 50 countries.
 
With the new ownership is said to have come tax avoidance schemes that have significantly reduced the amount paid in UK tax despite headquarters being based in Uxbridge.
 
Mondelez is able to get away with such tax systems because of a British legislation loophole. By configuring the company is such a way, Mondelez has been able to pay little to no tax in the UK.
 
The government had previously discussed amending the regulation that gave foreign investors a tax break on paid interest but decided against it once it was suggested that it might make the UK a less competitive market.


In a statement, Mondelez International said: “In common with all global businesses, we pay corporation tax based on the laws of the countries in which we operate. We comply with all applicable tax legislation in the UK, and on a global basis we pay hundreds of millions of dollars in corporate income tax annually.”
 
The company also says it does contribute to the British economy through employment, suppliers and ‘the recirculation of that expenditure in the wider economy”.
 
 
 
This isn’t the first time that there has been controversy surrounding the company. Earlier this year Cadbury announced they would be changing the chocolate used in the crème egg. While Canada’s recipes remained in its original form, British egg lovers were forced to try a new form of their Easter classic which caused uproar.