The Stack Archive

Facebook enjoyed £11.3 million in UK tax credit

Mon 10 Oct 2016

Facebook has been accused of recording £11.3 million in UK tax credit last year, having vowed to pay a fair amount after facing criticism in 2014 for paying just £4,327 in corporation tax.

While the social network made $3.7 billion (approx. £3 billion) in profits in 2015, with sales reaching £210 million, it also posted a loss of £52.4 million.

UK corporation tax of 20% is payable on profits only. Despite making a loss, it has been reported that Facebook had to pay the rate as it could not write off a £71 million staff shares payout. The internet firm paid UK corporation tax of £4.16 million to HM Revenue and Customs, but also subtracted a £11.3 million tax credit to offset future tax requirements.

The news has spurred debate about whether the tech giant is paying up its ‘fair share’ as promised following criticism in 2014. It was revealed that Facebook had been channelling its UK profits through its Irish headquarters with a lower corporation tax rate.

Earlier this year, the company stated that it had realigned its tax arrangements and suggested that, from this April, it would book its sales from its biggest British advertisers in the UK, meaning it would pay more tax.

In an internal statement the company wrote: ‘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.’

On the recent accusations, a Facebook spokesperson commented: ‘We pay all the taxes that we are required to under UK law. We are proud that in 2015 we have continued to grow our business in the UK and created over 300 new high-skilled jobs… The UK is now home to some of the most innovative technologies in the world including our investment in a high-tech solar-powered plane centre in Somerset that will help bring the internet to remote areas of the world.’

Last week Prime Minister Theresa May threatened to take action against tax avoidance among large corporations. The debate was sparked as it was revealed that online marketplace eBay paid less than £1 million in UK corporation tax last year, despite claiming it generated £1.1 billion in UK sales.

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