Facebook Being Shot At For Avoiding Tax
By utilizing an interesting structure to book profits abroad, Facebook paid under £5,000 in UK corporation tax last year.
Facebook is under fire in the UK for its tax arrangements. An investigation launched by the Daily Mail, found that the social media website paid only £4,327 in corporation tax in 2014, an amount which is less than the average employee in the UK pays in tax.
Between 2014 and 2015, sales at Facebook’s UK operation increased by over 100 per cent, along with the tech firm earning £105m last year, compared to £50m the previous year. When Facebook returned about £35m to its 362 employees in the UK, it faced a loss of £28m in the financial year ending in 2014. Facebook UK sells marketing and sales services to Facebook Ireland, which is where the company’s EU headquarters are based. Facebook Ireland then passes its profits onto an offshore organ, by purchasing the licensing rights from a subsidiary indirectly owned by two Cayman Islands companies, according to the Financial Times.
However, there is no mention or record of the offshore structures found in Facebook’s SEC fillings. Despite the drama, a Facebook spokesperson claimed that the company is compliant with UK tax law, and in all other countries where they operate in.