Revealed: Facebook pays no tax on £223m of its UK revenues
Tuesday 08 October 2013
Facebook paid no corporation tax in Britain last year despite generating an estimated £223 million in revenues, The Independent's sister paper the Evening Standard has revealed.
The social media giant's decision to process its UK sales in Ireland, which avoids tax, will reignite the controversy about how US tech giants are not contributing their fair share to the UK economy.
Accounts filed to Companies House show Facebook UK made a pre-tax loss of £2.4 million on turnover of £34.6 million.
However, eMarketer, an independent analyst firm that specialises in tracking digital spend, estimates Facebook generated £223 million last year from advertising in the UK.
Facebook, led by Mark Zuckerberg, will have booked most of those sales in Ireland despite many advertisers being based in Britain, a controversial technique that is legal under HM Revenue & Customs' tax law.
According to previous filings to Companies House, Facebook UK has paid just £1 million in corporation tax since opening a London office in 2007, even though it is estimated to have made over £500 million in sales in that time.
There is no doubt Facebook, the world's biggest social media site, is profitable and continues to grow, with over one billion users and 24 million daily users in Britain. Facebook's US stock market value has soared this year to $123 billion (£77 billion) despite newer rivals such as Twitter emerging.
Commons Public Accounts Committee chairman Margaret Hodge 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 HMRC and a strange silence from Government."
A Facebook spokesman said: "Facebook pays all taxes required by UK law and we comply with tax laws in all countries where we operate and have employees and offices. We take our tax obligations seriously, and work closely with national tax authorities around the world to ensure compliance with local law."
Facebook chief operating officer Sheryl Sandberg is close to Chancellor George Osborne, who hosted a party for her feminist book, Lean In, earlier this year. She insisted at the time Facebook was making a positive contribution. "We are growing and expanding and investing in this country and in this market," she said, noting Facebook's staff across Europe number more than 1000. Facebook UK employed 119 staff, up from 90 a year earlier. The wage bill, including share awards, was £21.9 million or £184,000 a head. Sandberg earned $26.2 million last year.
Facebook faced controversy a year ago when it paid £238,000 in UK corporation tax on estimated sales of £175 million. However, the tax avoidance debate has intensified since then, with executives from Google, Amazon and Starbucks being grilled by Hodge's committee, which urged the Government and HMRC to reform tax law.
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