What little we know of Facebook’s tax deal suggests it is becoming more of a friend to Britain than its fellow avoider Google.
Google came up with a low and seemingly arbitrary figure on a back-tax payment. It did not, as far as we know, substantially change its avoidance structures – all that double Dutch around Irish sandwiches and the like. As a result, Google’s taxes in future years are still likely to fall short of where its customers here would like.
Facebook, on the other hand, is changing its entire tax structure to do away with routing big UK advertising sales through low-tax Ireland.
That’s a fundamental change which suggests the company has actually heeded the protests against its earlier behaviour: behaviour that last year saw it pay UK corporate taxes of just £4,327. It could, just could, have also been running scared of the Government’s new Google Tax which threatens to levy a higher 25 per cent tax on big multinationals using tricksy schemes.
Perhaps, although this is even more doubtful, it had a pang of conscience about just how many doctors, nurses and teachers that £4,327 would have provided for its hundreds of UK staff and their families.
Personally, I’d like to see Facebook pay a big lump of back tax too, to appease for its bad old ways.
The year before last it had the audacity to claim £182,027 in tax rebates, so, on a net basis, we taxpayers were actually paying Facebook for doing business here.
Before we can judge this deal, we need far more clarity on whether Facebook will continue paying vast will-o’-the-wisp royalties to offshore entities to lower its UK profit.
Such arrangements, where subsidiaries and brass-plate holding companies allow Peter in Dublin to pay Paul in the Caymans make a mockery of the countries in which Facebook, Google and other major firms like them really operate.
However, yesterday’s deal is a start which will, perhaps, be followed by LinkedIn, Amazon, Apple and the other big companies who’ve been so clever in gaming the global tax system.