Facebook pays just £4million in tax while lavishing British staff with £165MILLION
Accounts show each of the firm’s 682 workers took home average of £242,000 each in 2015
Facebook lavished £165million on its UK staff last year, while handing the taxpayer just £4million.
Accounts show each of the firm’s 682 workers took home average of £242,000 each in 2015.
The bumper payout included £71million in a shares bonanza – double the figure for 2014 – which experts say could have been used to help Facebook cut in corporation tax bill.
Latest accounts show the social networking giant’s company tax bill rose from the paltry £4,327 in 2014, less than the average earner.
The revelations come days after it emerged another online giant, eBay , paid just £1.1million in tax in the UK last year.
Accounts just filed at Companies House show that Facebook UK had a turnover of £210.7million last year, double that of 2014.
However, the documents state that the money comes from providing “sales support, marketing and engineering support” for the wider Facebook group.
Those sales were more than outweighed by “administrative expenses” of £255million.
These undisclosed costs are believed to include royalties and interest on loans to other Facebook companies.
As a result, the UK arm of the social media giant ended up making a £52.5million loss last year.
That loss and others from previous years have been used by Facebook to offset its corporation tax bill here.
The accounts show its company tax “charge” was £4.2million.
But while the taxman may have got only a fraction of Facebook’s profits, staff raked it in.
The accounts show they got £165.4million in total, nearly double the £86million for 2014.
That included a massive leap in “share based payments”, up from £35.4million to £71million.
Professor Prem Sikka, of the University of Essex, said these are likely to include share options which are eligible to tax relief, which Facebook accounts use to offset its company tax bill.
Prof Sikka said: “The accounts comply with the legal requirements but are a model of opacity. They don’t provide any information about intra-group transactions and the shifting of profit.
“We don’t know what the profits really are. They seem to have gone to enormous steps to avoid UK tax.”
Alex Cobham, director of research at the Tax Justice Network, said: “Facebook UK’s accounts show specific issues, but point also to the real problem: that major multinational companies appear to be able to pick and choose, unlike the rest of us, where and how much tax they will pay.
“Facebook has used the accounting treatment of share options for staff – that is, of large payments to what are likely to be typically the most highly remunerated individuals – to create a tax benefit of around £15 million.
“The effect is that the £4 million tax charge of last year, and a further £11 million of future tax payments, will be cancelled out completely.
“So in practice Facebook UK appears to have paid nothing in corporate tax to the UK public purse – less, even, than the £4,327 in 2014 that sparked public outrage.
“Globally, Facebook declares a profit equal to roughly 20% of its revenues. In the UK, the accounts show that over £200 million of revenues have instead given rise to a loss of near £50 million. Is this a true reflection of the UK market’s worth to the global business?
“We may never know, because Facebook UK’s parent company is registered in Delaware – one of the most financially secretive jurisdictions, with no requirement to publish accounts, and a significant part of the reason why the United States is increasingly recognised as a leading tax haven.”
A Facebook spokesman 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.
“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.
“We pay all the taxes that we are required to under UK law. “