Facebook paid £4.1m in UK tax last year

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Facebook paid £4.16m in corporation tax in the UK last year, despite turnover more than doubling to £210m.

The social network posted taxable profit for the year to 31 December of about £20m, on which it paid tax at the standard corporation tax rate.

The figures follow an outcry last October when Facebook was found to have paid just £4,327 in UK corporation tax for 2014.

The firm has started booking revenue from large UK customers in Britain.

Facebook said in March it would no longer route advertising sales through Ireland for its largest advertisers.

That change, which took effect on 1 April, should mean the US company starts paying millions of pounds more in tax in the UK.

A spokesperson for Facebook said: “We are proud that in 2015 we have continued to grow our business in the UK and created over 300 new high skilled jobs. We pay all the taxes that we are required to under UK law.”

The figures were revealed in Facebook UK’s accounts, which were published on Companies House on Sunday.

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Facebook chief executive Mark Zuckerberg

Richard Murphy, a chartered accountant and professor of practice in international political economy at City, University of London, said it was difficult to determine whether Facebook was paying the right amount of tax in Britain.

“Facebook’s UK accounts do not represent its real sales in this country, which are actually booked in Ireland with their true value never being disclosed,” he said.

‘Exercise in opacity’

“The Facebook UK accounts just record the costs it incurs in the UK, with a bit of profit added on to keep HMRC happy. That’s not good enough in the current climate.

“Facebook UK’s accounts are an exercise in opacity when what we really need is transparency. If accountants continue to refuse to provide what users of accounts need then it will be time for the government to act.”

Tax specialist Jo Maugham QC said: “Facebook’s accounts are rather opaque. But we can be confident that the structure of its business continues to be driven by the desire to make the smallest possible financial contribution to the public infrastructure it uses.”

Facebook employed 682 people in the UK last year, up from 362 in 2014, and the company now has more than 1,000 full-time equivalent staff.

The company gave share options worth £71m to its UK staff last year. Those options allowed Facebook to reduce its tax bill by £25m because it will be able to claim a tax break in the future when they are paid out.

It has booked the tax deduction because it now expects to make taxable profits in Britain in coming years following the decision to book UK advertising sales in the UK rather than Ireland.

Globally Facebook made profits of $3.7bn in 2015 on revenues of almost $18bn – 44% higher than the previous year.

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