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SKY: Guinness Owner Fires Warning Shot On UK Tax

5:02pm UK, Thursday February 11, 2010
Ed Merrison, Sky News Online

The boss of Diageo has told Sky News the drinks giant will consider walking away from Britain if future tax rises make it a less attractive base for its business.

Chief executive Paul Walsh said the company, which owns brands such as Guinness and Smirnoff, said it would be forced to reassess its options if the system became any less favourable from an individual or corporate viewpoint.

"We enjoy operating out of London; it's got many advantages," Mr Walsh told Sky.

"However, if the UK, either from a corporate perspective or a personal tax perspective, becomes uncompetitive, we will be forced to look at alternatives.

"We are a global business, we operate in 180 countries around the world - our location here in London should not be taken for granted."

Sky News City editor Mark Kleinman recently revealed that Diageo had resisted Switzerland's aggressive attempt to lure it away from London by offering exceptionally low tax rates for the company and its top executives.

Mr Walsh's latest comments came after Unilever boss Paul Polson told a newspaper that it would be "unfortunate for the UK" if additional tax or regulation were to further hamper the consumer goods giant's business.

"We do have choices where we put research laboratories, choices for manufacturing facilities and choices where we put our senior management," Mr Polson told the Daily Mail.

"Right now we're happy with the choices we've made, but any responsible businessman needs to continue to assess that within an ever-changing global environment."

Mr Walsh's warning to UK authorities came as the firm posted its half-year results, unveiling a 10% fall in post-tax profits.
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"We are a global business, we operate in 180 countries around the world - our location here in London should not be taken for granted."

Paul Walsh, Diageo chief executive

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The chief executive described it as a "tale of two quarters", with an encouraging end to the year, especially in the UK where its beer, wine and spirits all gained market share.

The 2% rise in second-quarter sales led Mr Walsh to declare the company to be "in the early stages of recovery".

"I think the critical challenge (for 2010) is around consumer expenditure," he told Sky.

"You have to have reasonable GDP - that puts money in people's pockets - but you also need a degree of confidence, and that is what we've seen lacking in certain European markets.

"In the guidance we're offering, we're not seeing any snap back in that regard but that's what it's going to take long term to get Europe back in growth."

http://news.sky.com/skynews/Home/Business/Guinness-Owner-Diageo-Warns-Over-UK-Tax-Boss-Paul-Walsh-Says-Firms-Location-In-London-Not-A-Given/Article/201002215546900?lpos=Business_First_Home_Article_Teaser_Region_5&lid=ARTICLE_15546900_Guinness_Owner_Diageo_Warns_Over_UK_Tax%3A_Boss_Paul_Walsh_Says_Firms_Location_In_London_Not_A_Given