Tax row as firms circle Vodafone

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Vodafone could fall into overseas ownership as it struggles to avoid a gargantuan tax bill on its stake in an American joint venture, analysts warned yesterday.

If Vodafone chief executive Vittorio Colao were to sell its stake in the venture – which was founded in 2000 – he would be left with a levy equal to the rate of corporation tax on the capital gains Vodafone has made since starting VZW. Analysts have pegged the value of the stake at up to £100bn, which could result in a tax bill of around £20bn.

The Institute of Economic Affairs yesterday hit out at chancellor George Osborne’s tax policy, saying: “The problem of capital gains liability paradoxically makes takeovers more likely rather than less.”

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