Facebook's UK operation paid less UK tax than a typical full-time worker in 2014, the Daily Mail reported on Monday, despite its British revenues topping £100 million for the first time.
The analysis, based on accounts filed by Facebook's UK subsidiary at Companies House on Friday, found that the company paid £4,327 in corporation tax in 2014, less than the combined income tax and national insurance bill for the average UK full-time worker, which is a little over £5,000.
The social media giant's tax bill was so small because its accounts showed a sizeable £28 million loss in the UK for the year, in large part due to a generous £35 million staff share scheme. The Mail calculated that the typical UK employee of Facebook received total of £210,000 in salary and bonuses.
Despite its loss in the UK, Facebook made global profits of $2.9 billion (£1.9 billion) in 2014, according to its public accounts. Facebook does not have any servers in the UK, instead defining its operations in the country as "providing sales support, marketing services and engineering support to the Facebook group".
Facebook's £4,327 tax charge for 2014 was still markedly higher than what it recorded for 2013, when its final total came out at minus £182,027 – in accounting terms, a negative tax balance.
Because Facebook has racked up multiple years of accounting losses in the UK, it has an amassed balance of around £21 million it can claim back against taxes on future profits – but George Osborne shouldn't expect to see any of those too soon.
Facebook isn't counting that £21 million as an asset, its accounts say, because there is "uncertainty that in the foreseeable future there will be suitable profits" to deduct them against.
The issue of where technology companies charge their sales and profits has been a hot topic in the UK. Because tech giants often have complex global structures which allow them to take revenues and profits in different countries – made easier by their online nature – several have been criticised for not paying much tax in the UK.
The issue led Osborne, who has cut corporation tax from 28% when he became chancellor to 18% in his latest budget, to propose a "Google Tax" against companies that shift profit from UK customers overseas.
The mechanism will rely on HMRC assessing large companies and ruling whether or not the way they allocate their sales and profits from UK customers is "artificial".
James Ball is a special correspondent for BuzzFeed News and is based in London. PGP: here
Contact James Ball at James.Ball@buzzfeed.com.
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