Kellogg has attracted attention in the UK over its tax arrangements in the country after warning that the closure of tax loopholes could hit profits in its annual report.
The company stated: "Due to economic and political conditions, tax rates in various foreign jurisdictions may be subject to significant change… Contemplated changes in the UK and other countries of long-standing tax principles if finalised and adopted could have a material impact on our income tax expense."
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The UK is targeting tax structures used by multinational corporations as part of a broader campaign led by the OECD to limit tax avoidance and the use of offshore tax havens.
UK chancellor George Osborne claimed last month that government measures to combat tax avoidance would raise GBP3.1bn. Efforts would include a so-called Google tax aimed at profits that are shifted abroad by multinationals to avoid payments to HM Revenue and Customs.
According to accounts first reported in the Sunday Times, Kellogg’s two main UK subsidiaries paid corporation tax of GBP8.4m on declared profits of nearly GBP50m in 2013. These subsidies are operated through Irish-based Kellogg Europe Trading Ltd. Kellogg’s also has six Luxembourg registered companies which collectively paid corporation tax of GBP210,000 on profits of about GBP57m, Kellogg's accounts show.
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These tax payments were, however, offset by a tax credit worth GBP11.8m, recorded by another UK-registered Kellogg company, Kellogg Group Ltd.
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By GlobalDataAccording to Tax Research UK's tax and economics expert Richard Murphy, Kellogg's corporate structure in the UK means that there are no country-specific results from which to base a tax calculation upon.
"We have no UK consolidated result on which to base any evidence. There is significant opacity here, and that can only be deliberate, even if entirely legal," Murphy noted. "What we do have are three things. The first is evidence that there is an Irish engagement in the Kellogg operation. Secondly we have evidence of Luxembourg involvement and third there appears to be little tax paid, about which Kellogg now have concern because they think this might change."
Kellogg did not respond immediately to requests for comment.
