Facebook to pay millions of pounds more in tax following outrage

Social network will overhaul tax structure

Facebook makes around £4bn a year globally, and after the US, the UK is one if it’s largest markets. Yet in 2014, the social network founded by Mark Zuckerberg only paid £4,327 in corporation tax in Britain.

In fact, the government’s tax collection arm, HMRC, paid Facebook more money in adverts telling people to pay their tax (£27,000), than Facebook paid in its entire tax bill in 2014.

And as people began to notice that they pay more tax per year than this multinational headed by one of the world’s richest men, levels of condemnation soared.

In addition, the government’s diverted profits tax, which made Amazon move to pay corporation tax on UK sales last year, would also have hit Facebook hard.

The diverted profits tax imposes a punitive 25% tax bill on companies deemed to be artificially routing profits overseas.

Meanwhile corporation tax in Britain is set at 20%.

This means Facebook will no longer route its advertising sales through Ireland for the large companies that pay for advertising on the social network.

According to the BBC, Facebook posted an internal memo to staff which said: “On Monday, we will start notifying large UK customers that from the start of April, they will receive invoices from Facebook UK and not Facebook Ireland.

“What this means in practice is that UK sales made directly by our UK team will be booked in the UK, not Ireland. Facebook UK will then record the revenue from these sales.

“In light of changes to tax law in the UK, we felt this change would provide transparency to Facebook’s operations in the UK.

“The new structure is easier to understand and clearly recognises the value our UK organisation adds to our sales through our highly skilled and growing UK sales team.”

Now read

Social Bookmarks