14 October 2015

Facebook under fire for tax avoidance

Facebook paid under £5,000 in UK corporation tax last year, using a complex structure to book profits offshore.

By Bernard Goyder


Facebook is under fire in the UK for its tax arrangements. An investigation by the Daily Mail, based on filings to Companies House, found that the social media giant paid just £4,327 in corporation tax in 2014, less than the average employee in the UK pays in tax. 

Sales at Facebook's UK operation increased by over 100 per cent between 2014 and 2015, with the tech firm earning £105m last year, compared to £50m the previous year. By returning around £35m to its 362 employees in the UK, Facebook made a loss of £28m in the financial year ending in 2014. Facebook UK sells marketing and sales services to Facebook Ireland, where the company's EU headquarters are based. Facebook Ireland then passes its profits onto an offshore vehicle, buying the licensing rights from 'a subsidiary indirectly owned by two Cayman Islands companies', the Financial Times has reported.

No mention of the offshore structures were found in the tech firm's SEC filings. A Facebook spokesman told the Daily Mail: ‘We are compliant with UK tax law, and in fact in all countries where we have operations and offices'. Sources: Daily Mail; BBC News

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