Diageo denies report it plans tax move to Ireland

DUBLIN Sun May 11, 2008 9:16pm IST

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DUBLIN May 11 (Reuters) - Guinness brewer Diageo Plc (DGE.L) denied a report on Sunday that it had held talks with the Irish government about moving the British drinks giant's headquarters to Ireland to benefit from lower corporation tax rates.

Ireland's Sunday Independent newspaper reported that talks on a move between deputy prime minister Mary Coughlan and senior Diageo managers, including Chief Executive Paul Walsh, took place on Friday.

Michael Patten, head of corporate relations at Diageo's Irish operations, said he arranged and attended Friday's meeting but that it had been set up to brief the Irish government on plans to overhaul Guinness brewing operations in Ireland.

"I was absolutely stunned by the article in the Sunday Independent because no such discussion took place," Patten told Reuters.

"Somebody has obviously put two and two together and come up with six or seven," he said, pointing to recent moves by other British companies to relocate to Ireland where the corporate tax rate is among the lowest in Europe at 12.5 percent.

The Sunday Independent reported such a move by Diageo would save the company 250 million euros ($386.5 million) in tax a year. The newspaper cited one well-placed source as saying the company's board was divided over whether to relocate.

Diageo announced on Friday that it would spend millions on a new brewery near Dublin but that it would renovate and reduce the size of its historic operations in the centre of the city and close two smaller breweries elsewhere in Ireland.

(Reporting by Paul Hoskins; Editing by Rory Channing)

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