Facebook pays just £2.6m tax on £58m profit
‘Still taking the mickey’
FACEBOOK was last night branded a ‘parasite’ on Britain, as its UK arm paid just £2.6million in tax last year, despite quadrupling sales to more than £840million.
A leading tax expert said the company should have paid the taxman around £76million based on the global profits it declares – but it was able to use tricks to legally reduce the figure.
Facebook slashed its UK tax bill by giving huge share bonuses to staff, and claiming legal tax breaks. If they had not done that, the firm admits it should have paid £11.3million on its declared profits of £58million.
Experts also speculated that it found undisclosed ways of shrinking its UK profits figure, the number used to calculate corporation tax, by moving enormous sums overseas.
Last night its paltry contribution to HMRC angered MPs and tax campaigners.
Meg Hillier, Labour MP and chairman of the powerful Public Accounts Committee, said companies have a ‘moral duty’ to pay tax and Facebook should not be proud that it has ‘got away with it’.
‘Whatever the letter of the law, the spirit is not being followed here. They seem to be paying too little,’ she said. ‘Paying tax is a moral duty. [Facebook] doesn’t operate in isolation. They are either based here and have operations here and pay tax here, or they don’t. They can’t have it both ways.’
Natalie Bennett, the former Green Party leader, urged the Government to force Facebook to make a bigger contribution.
‘ This parasite cannot be allowed to continue this way – we pay for infrastructure their profits depend on,’ she said.
Richard Murphy, a tax professor at London’s City University, said Facebook’s UK tax bill ought to have been nearly 30 times larger than the £2.6million it settled on.
‘It feels like Facebook are still taking the mickey out of the UK tax system and their UK users techniques to lower its UK profit figure, but described its UK accounts as ‘ massively opaque’ and ‘an exercise in contempt for the UK tax system’.
He speculated that Facebook has kept its UK profit figure lower than expected by moving money overseas, potentially as ‘charges’ to the UK arm from other parts of the company.
The UK accounts show that Facebook has 960 British employees, earning an average salary of £108,000 a year – a figure which soared to almost £190,000 taking into account their share-based bonuses.
Last night, Facebook insiders disputed Mr Murphy’s claims, saying his calculations did not account for the cost of sales.
A spokesman added: ‘ We continue to invest and expand in the UK, employing 1,500 people in our new offices by the end of this year.’