Welcome to Barclays’ first Country Snapshot, covering 2013.
The origin of this document lies in a Europe-wide regulatory requirement for banks to publish 2013 turnover and employee numbers for all countries where they operate, with further expected disclosure requirements in subsequent years.
We have decided to go further and provide all relevant information this year. So this report also includes details of the profit we generated, tax we paid and the subsidies we received in each country where we have a significant business, alongside a brief explanation of the business we undertake there. Some of the numbers are complex and can be hard to interpret so we have tried to explain clearly how they are generated. Because we are publishing this additional information, we believe this document will be of most interest to those who want to see the amount of tax we pay in the various countries in which we operate.
In February 2013, we set out clear principles to govern our approach to tax. Our tax planning will only support genuine commercial activity; it must comply with accepted custom and practice and be of a type that tax authorities would expect; and we will only undertake it for customers and clients sophisticated enough to understand its risks. In short, all our activity relating to tax must be consistent with our purpose and values.
Tax influences decisions about how we organise and run our business, and about where we base our operations or hold assets. Making these decisions is an integral part of running a commercial organisation and, when tax is a factor in deciding where or how we do business, we ensure there is genuine substance to the activity we conduct in each country.
However, we also have an obligation to our shareholders not to pay more tax than we owe. But we do not seek to avoid paying our share and we are proud of the contribution we make. For example, in 2013 Barclays paid £1,425m of tax in the UK, and we have been ranked in the top four UK taxpayers by PwC in each of their last three annual surveys of the One Hundred Group which represents most of the UK’s largest companies.
This contribution reflects the fact that we are a UK-headquartered bank. As the table in the report shows, our total UK tax payments include very significant social security, VAT and Bank Levy payments that arise from our UK base. UK corporation tax is a much smaller part of the mix as this is paid only on the profits Barclays actually generates in the UK, not on profits generated in other parts of our business and then passed to our UK headquarters as dividends, for example. So of the UK profit before tax of £4,874m identified in the table in the report, around £3bn is actually dividends from our businesses in other countries, and £2.4bn represents gains on internal reorganisations (for example the creation of our Barclays Africa Group), neither of which are taxable in the UK. This is why we have not made a larger corporation tax payment in 2013.
As the table in the report makes clear, the vast majority of profits that are generated in other parts of our business are subject to corporation tax in the countries where they are generated – often at a higher rate than in the UK. Globally, we paid £830m of corporation tax in 2013 (excluding withholding taxes) making our global cash tax rate 29%. The cash tax rate is the corporation tax paid in 2013 divided by our group profit before tax. When we include other taxes we paid, the total comes to £3,374m in 2013. These numbers represent taxes we have borne and do not include any taxes collected on behalf of any tax authority, such as income tax collected via PAYE and employees’ national insurance contributions.
Tax and employment are not Barclays’ only economic contribution. From the provision of basic current accounts to the work our investment bank does helping companies and governments raise money for investment, Barclays makes a vital contribution to economic growth and economic growth is in turn vital for a vibrant and growing society.
Bank taxation remains a matter of some public interest, and we believe that Barclays should take a lead in explaining our activity transparently so that we can engage with all our stakeholders on an informed basis.
We hope that this report, along with the information we publish in our Annual Report and our Citizenship Report, will take us further down that road.