Kellogg's is the latest US owned multinational to be embroiled in the controversy over tax avoidance in Britain . Kellogg's is the latest US owned multinational to be embroiled in the controversy over tax avoidance in Britain. The cereal giant warned shareholders its profits could be hit by government moves to close tax loopholes. Kellogg’s, which makes hundreds of millions of pounds each year from sales to British families, uses a complex web of companies to do business here. Its two main UK subsidiaries are owned by an operation based in the Republic of Ireland, where corporation tax is 12.5 per cent, compared with the UK’s 20 per cent. The latest figures show Kellogg’s effectively paid no corporation tax in Britain in 2013, as payments to HMRC by some of its offshoots were wiped out by tax credits elsewhere. These tax manoeuvres are perfectly legal. Kellogg’s has so far not faced criticism for its tax affairs in Britain, unlike Google, Amazon and Starbucks, which have come under fire for paying a minimal amount to the Exchequer despite huge sales here. But in its latest annual report the cereal-maker, whose worldwide sales last year hit £9.8billion, admitted ‘contemplated changes in the UK and other countries’ to ‘long established tax principles’ could have a ‘material impact’ on its business. It added VAT increases and other changes ‘may have an adverse effect on our business’. Kellogg’s has produced cereals in the UK since 1938, and says it has several hundred employees here. It sells in the UK through two main subsidiaries owned by Irish-based Kellogg Europe Trading Ltd. One is Kellogg Marketing & Sales, which distributes breakfast food for Irish and Swiss-registered companies, and reported sales of £622million to Britons in 2013. The second, Kellogg Company of Great Britain, makes cereals under contract for an Irish-based operation. These two subsidiaries paid corporation tax of £8.4million on profits of nearly £50million in 2013. Kellogg’s also has six Luxembourg registered companies which collectively paid corporation tax of £210,000 on profits of about £57million – a rate of 0.37 per cent. But this £210,000 and the £8.4million were offset by an £11.8million tax credit at another UK-registered operation, Kellogg Group Ltd. Kellogg’s said comments in its annual report are not related to Chancellor George Osborne’s ‘diverted profits tax’ – which aims to snare companies that shunt profits overseas with the main purpose of saving tax . A Kellogg’s spokesman confirmed the figures but said some profits through the Luxembourg business would relate to companies outside the UK. He declined to comment on whether Kellogg’s accepted it had in effect paid zero corporation tax in Britain, but said it is ‘a responsible taxpayer’. Kellogg’s said comments in its annual report are not related to Chancellor George Osborne’s ‘diverted profits tax’ – which aims to snare companies that shunt profits overseas with the main purpose of saving tax. Richard Murphy, of Tax Research UK, said: ‘It looks as if Kellogg’s is trading in similar fashion to many of the better known tax avoiders.’
Kellogg’s makes hundreds of millions from annual sales to British families . But latest figures show it effectively paid no corporation tax in UK in 2013 . Uses complex legal tax manoeuvres involving subsidiary companies . But new measures introduced by George Osborne set to close loophole .