Home news Facebook UK pays just £2.6m tax on £58m profit

Facebook UK pays just £2.6m tax on £58m profit

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Facebook could face fresh allegations that it doesn’t pay enough tax after annual results showed its UK business has swung back into profit.

The company’s turnover quadrupled to more than £840m in the year to 31 December, with pre-tax profits of £58.4m.

Despite this, Facebook UK listed its corporation tax liability as £5.1m – and once tax credits and deductible expenses were applied, it only paid £2.58m.
The social network’s remarkable rise in revenue is a result of advertising spend by big British companies now being accounted for by the UK business, instead of being funnelled through its Irish arm.
Facebook UK’s tax payment represents about 4.4% of its total pre-tax profit, and about 0.3% of its turnover.
The company’s figures also reveal that it employed an average of 960 people during 2016, with a total wage bill of just over £104m.
That suggests that the average employee of Facebook UK is paid more than £108,000, before any bonuses are taken into account.

However, that figure has actually fallen since 2015, when the average salary was over £114,000. This suggests that the rapid expansion of the company’s sales team has seen people being recruited on slightly less generous salaries.
If those figures seems high, it’s worth remembering that pay given to the directors of Facebook UK are not included in those statistics – they are all paid through other Facebook companies.
The company also paid out nearly £78m in share-based payments.
These results will add to the scrutiny that is now routinely paid on the tax paid by giant international technology companies.
By coincidence, Facebook UK’s company results came out on the same day that Amazon was being upbraided for an illegal tax agreement with Luxembourg.
Meanwhile, Ireland has been told it will be taken to court for its failure to pursue Apple for €13bn (£11.5bn) of unpaid tax.

Source: Sky News