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 2013 sales to British families . But latest figures show it effectively paid no corporation tax in UK in annual . Uses complex legal tax manoeuvres involving subsidiary companies . But new measures introduced by George Osborne set to close loophole .