BT 2016 Annual Report Download - page 99

104 BT Group plc
Annual Report 2016
Taxation
Our eective corporation tax rate before specific items was
17.5% compared with 19.9% in 2014/15. This is lower
in both years than the UK corporation tax rate of 20%
(2014/15: 21%).
Our tax contribution
We are proud to be a major contributor of taxes to the UK
economy.
This year we paid UK corporation tax of £200m (2014/15:
£225m).
In both years we have benefited from tax deductions associated
with our employee share schemes and pension schemes. We expect
to continue to benefit from tax deductions from our pension
schemes and also from EE’s historic tax losses.
Additionally, we paid non‑UK corporate income taxes of £56m
(2014/15: £84m), which primarily reects the fact that most of
our business is UK‑based.
This year the total taxes we both paid and collected for the UK
Government totalled £2.9bn (2014/15: £3.0bn). The Hundred
Group Total Tax Contribution Survey for 2015 ranked us as the 7th
highest UK contributor. We also contributed £0.4bn (2014/15:
£0.4bn) in our largest non‑UK jurisdictions.
Our approach to tax
Our aim is to comply with the tax laws and regulations in each
of the countries in which we do business.
We seek to have open and co‑operative working relationships
with tax authorities worldwide.
We manage our tax aairs conservatively and in a manner
consistent with the group’s wider purpose and strategy. We take
the benefit of widely claimed tax incentives and apply OECD
principles.
Tax governance
We have a global framework for managing taxes, which is set
centrally at a group level and agreed by the Board.
The application of tax rules is not always clear, and discussions
with tax authorities can and do take many years to resolve. We
actively monitor our potential tax exposures.
Our group tax team supports regional management to meet
local tax regulations.
Tax expense
Our total tax expense before specific items was £607m (2014/15:
£631m). This is not the same as the total corporation tax we paid
in the year and it excludes tax deductions associated with our
pension schemes.
Our eective tax rate on profit before tax and specific items is
impacted by our accounting for deferred tax on non‑UK losses
and changes to our estimates of prior year uncertain tax positions.
Excluding these, we would expect our eective tax rate to be
around the UK corporation tax rate, as the majority of our business
occurs in the UK. This is shown in the table below.
Year ended 31 March
2016
%
2015
%
2014
%
Tax at UK statutory rate 20.0 21.0 23.0
Non-UK results taxed at dierent rates 0.1 0.8 0.2
Net permanent dierences 0.3 –0.3
20.421.8 23.5
Changes to prior year estimates (2.5) (1.1) (0.6)
Deferred tax accounting for non-UK losses (0.4) (0.8) (1.2)
Eective tax rate 17.5 19.9 21.7