Food giant Kellogg’s has issued a warning to the UK government stating that newly implemented legislation designed to clamp down on multi-national company tax avoidance could slash profits and cause a “material” increase in its income tax.
The comments follow the launch of the GoogleTax (Diverted Profits Tax) by chancellor George Osborne during the UK budget speech, conceived to impose a 25 per cent levy on profits shipped abroad – a technique often perpetrated by multinational companies.
In response, Kellogg’s said in its annual report: “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 finalized and adopted could have a material impact on our income tax expense.”
The company is the first corporation to issue such a warning in the aftermath of the Google Tax being launched.
Kellogg’s will take a significant blow from the tax. The Sunday Times reports that its 0.37 per cent tax is set to climb (20 per cent is the standard UK rate).
However, the company has in place a series of complex mechanisms in place to lower its tax outputs. In 2013, UK consumers spent a massive £622m on Kellogg’s products.