Boots Faces a Taxing Time after Switzerland Switch

Article excerpt

Byline: Roger Baird

ALLIANCE Boots put up a spirited defence against charges that it pays up to [pounds sterling]100m less in UK tax a year since it moved corporate headquarters to Switzerland. The High Street chemist, which was bought by executive chairman Stefano Pessina and US private equity house Kohlberg Kravis Roberts (KKR) in 2007 for [pounds sterling]11bn, said it paid [pounds sterling]240m in UK taxes last year.

But the chain admitted this bill would have been [pounds sterling]50m higher if it had not made additional pension contributions, set up a new tax deductible pension partnership scheme with its trustees and made [pounds sterling]546m of interest payments on its [pounds sterling]7.8bn debt pile.

Tax experts said since the firm's move to the Swiss tax haven of Zug it on average pays [pounds sterling]100m less in UK tax a year.

But Pessina countered, saying: 'We have invested a little less than [pounds sterling]1bn over the last four years in Alliance Boots. I and KKR have taken no dividends out of the business. 'We invest the cash the business makes. This has allowed us to employ an extra 1,000 people worldwide last year, even in these difficult times.'

The retailer, which employs 115,000 staff in over 3,000 stores, added it was in no hurry to float itself back on the stock market. Pessina said he was a 'long term investor'.

And he added that KKR was unlikely to press for a float for the next 'two to three years' because there was more growth in the business.

Boots said its full-year trading profit rose 14. …