Facebook pay £28m tax on £1.6bn sales
Shadow Chancellor slams ‘grotesque unfairness’
THE UK arm of Facebook paid just £28.4million in corporation tax last year – despite notching record turnover of £1.6billion. The subsidiary was boosted by cash from big advertisers, booked here rather than abroad since 2016 after the social media giant caved in to pressure. But while its tax bill was up from £17.2million in 2017, critics said it was still not paying its fair share as other ad sales are being funnelled offshore. Shadow Chancellor John McDonnell said: “How many more examples does this Government need before it will take action? “No wonder people are outraged at the grotesque unfairness of our tax system.”
Labour MP and tax campaigner Margaret Hodge said the bill was “outrageous”.
Facebook, founded in the US by Mark Zuckerberg, expanded here in 2008 and its main UK-registered business had a total turnover of £4.2billion.
It hired former Lib Dem leader Nick Clegg as its head of global policy and communications in 2018.
Last year’s £1.6billion was up £300million on 2017 and of that, some £800million came from advertising – up 50 per cent.
The remainder came from “sales support, marketing and engineering support” for other group entities.
Facebook UK started off with a £439,884 profit in 2008 – nine per cent of its turnover – and paid £147,884 tax.
But it had losses of almost £109million from 2011 to 2015.
Accounts from Companies House reveal profits went up from £62.8million to £96.6million last year.
But it has only made a £219million profit in a decade – or five per cent of turnover.
Once losses are offset, it is 2.6 per cent.
Professor Richard Murphy, a tax expert from City, University of London, said: “We need all large companies to declare precisely what tax they pay on their profits in each country.
“Then we’ll know what’s paid and they will have to explain their tricks, or stop doing them.”
The Tax Justice Network’s Alex Cobham added: “If Facebook had declared UK profits on sales at the same rate it does globally, it would have paid another £100million in tax.”
Steve Hatch, Facebook’s vice president for Northern Europe, said: “Revenue from customers supported by our UK teams is now recorded here so any taxable profit is subject to UK corporation tax.”