£0! Facebook’s tax bill on £220m sales
FACEBOOK paid no corporation tax in Britain last year despite raking in more than £200million from its UK operations, documents reveal.
It means the internet giant has paid just £1million in corporation tax on the half a billion pounds of revenue it has made since arriving in Britain in 2007.
Furious MPs last night accused the social media company of ‘deliberately manipulating’ its accounts – and demanded tougher action on tax avoidance by big multinationals.
Facebook makes money from selling adverts targeted at its users based on their personal preferences.
In a practice that is legal but has been branded ‘immoral’ by MPs, the social networking company records most of its UK sales in Ireland. Like other US technology firms such as Google, it bills its UK arm simply as a service and marketing division.
During 2012 the company’s UK division states it made a pre-tax l oss of £ 2.4million on sales of £ 34.6million – which meant it incurred no tax bill. But according to some analysts the true sales figure from its UK operations would be closer to £223million, the majority of which will have been registered to its Irish division.
Margaret Hodge, chairman of the Public Accounts Committee which has investigated Google and Amazon over tax avoidance, said: ‘This is yet another example of what appears to be deliberate manipulation of accounts of economic activity to deprive the British taxpayer of a rightful tax contribution, according to the profits they make in the UK. I am getting fed up of this constant stream of stories and little sign of a challenge from HM Revenue & Customs and a strange silence from Government.’ The row comes amid growing unease over tax avoidance by big multinationals and the failure of HMRC to deal with the problem.
Google was accused in May this year of ‘doing evil’ by avoiding British taxes.
Starbucks also attracted criticism after it emerged last year that it had paid no UK corporation tax in the previous three years. Google and Facebook together account for almost half the £6billion that is expected to be spent on digital advertising in Britain this year.
According to analysis by eMarketer, which specialises in tracking funding by digital companies, Facebook’s sales from the UK have risen from £181million in 2011 to £223million last year. This figure could be higher than £300million during 2013.
France is pushing for Europe to adopt a new corporation tax regime which would see multinationals such as Google and Facebook taxed
‘Deliberate manipulation’
in the countries where customers use their websites. A Facebook spokesman said: ‘Facebook pays all taxes required by UK law and we comply with tax laws in all countries where we operate. We take our tax obligations seriously, and work closely with national tax authorities around the world to ensure compliance with local law.’
Tax accountant Richard Murphy said: ‘This company is avoiding tax, plain and simple. If its income was recorded in the UK, as it should be, then it should end up paying tax.’