Facebook Under Scrutiny for Paying £4.1 Million U.K. Tax in 2015


Leading social networking site Facebook reported a sharp increase in the tax in paid to the U.K. government last year, but it is being criticized for paying very low amount in comparison to turnover.

The popular social network came under intense criticism when it reported paying just £4,327 in corporation tax in 2014. The public outcry generated then made the American company to decide it would improve on how much it pays. It appears to have kept to that promise, but many campaigners are still not satisfied.

Accounts posted by Facebook on Companies House on Sunday showed it paid £4.1 million in UK tax in 2015, which was a very significant improvement over the amount it paid in the year before. However, it also received £11.3 million ($14 million) in tax credit which it can use to offset tax payments at a later date.

The tax credit, which has angered many critics, is the result of tax rules associated to a Facebook employee bonus program.

The social networking site’s activity in the U.K. revolves principally around marketing, sales support and engineering. Its turnover in the country doubled in 2015 to £210.7 million, up from £104.9 a year earlier. However, loss after tax stood at £41.1 million for the year, compared to the £28.4 million loss recorded in 2014.

In 2015, Facebook provided jobs for 682 individuals in U.K., according to the BBC, up from 362 in the year before. It is now believed to have over 1,000 full-time equivalent staff.

The company paid tax on a taxable profit of around £20 million for the year to Dec. 31 at the normal corporation tax rate. Its accounting practices have not been found to have flouted any law in the U.K., but some campaigners still believe that it needed to be made to pay more in taxes.

“Facebook UK’s accounts show specific issues, but point also to the real problem: that major multinational companies appear to be able to pick and choose, unlike the rest of us, where and how much tax they will pay,” campaigner Tax Justice Network said in a statement.

Several multinational technology companies have come under increasing pressure in the U.K. for doing so much business and paying very little amount into the national treasury. British Prime Minister Theresa May last week issued a warning to businesses that are in the habit of paying little amount in taxes. She said such would not be permitted anymore and that action would soon be taken against the businesses involved.

The amount Facebook pays in taxes in UK looks to improve in the future, though. The company revealed earlier in the year that it would stop booking advertising sales by its team in the U.K. in Ireland and start doing that in Britain. This move, which came into effect in April, is expected to significantly boost this year’s revenues, which will be reported in 2017.

Facebook is not the only American technology company that has come under scrutiny on tax matters. Earlier in the year, Google agreed to pay £130 million in back taxes to the U.K. government. The European Commission in August also ordered Apple to pay Ireland €13 billion ($14.5 billion) in back taxes.

Facebook recorded nearly $18 billion in global revenues last year for $3.7 billion in profits.

Leave a Reply

Your email address will not be published. Required fields are marked *