Facebook under fire for £0 UK tax bill

Oct 10, 2013 | Facebook marketing

Facebook paid no corporation tax in the UK in 2012, despite raking in £223 million in advertising revenue, according to a news report. The firm’s UK ad operations made a pre-tax loss of £2.4 million on turnover of £34.6 million, partly due to share options granted to employees before the firm’s stock market floatation and […]

Facebook paid no corporation tax in the UK in 2012, despite raking in £223 million in advertising revenue, according to a news report.


The firm’s UK ad operations made a pre-tax loss of £2.4 million on turnover of £34.6 million, partly due to share options granted to employees before the firm’s stock market floatation and deficits carried over from 2011.
Facebook UK’s tax bill fell from £238,000 to nothing last year as a result, as the company still has £11.8 million of unrecognised tax losses to carry forward, according to a news repport.
Quoting stats from eMarketer, The Daily Telegraph found that that Facebook made £223 million in advertising in the UK last year and is expected to increase that sum by 36% in 2013.
The ad sales revenue does not appear on the firm’s Companies House accounts because Facebook processes its UK sales in Ireland, a contentious practice that does not violate British tax laws.
“Facebook pays all taxes required by UK law and we comply with tax laws in all countries where we operate and have employees and offices,” said a Facebook spokesperson.
“We take our tax obligations seriously, and work closely with national tax authorities around the world to ensure compliance with local law.”
Commons Public Accounts Committee chairman Margaret Hodge has hit out at the social network over its tax practices, calling them “deliberate manipulation of accounts of economic activity to deprive the British taxpayer of a rightful tax contribution”.
Analysis- missed opportunity for UK?
Commenting on the revelations, Jason Woodford, CEO of SiteVisibility, Jason suggests that whilst Facebook has technically done nothing wrong, “it flies in the face of logic and is frustrating for any UK taxpayer that businesses, which earn their income in the UK, don’t pay tax on all of that income”.
He also says “the UK is one of the most advanced economies in terms of online advertising and it’s unlikely that businesses such as Facebook would pull out if they were made to pay more tax”.
Woodford comments: “So Facebook paid no corporation tax in Britain last year despite reporting UK ad revenues of £223 million? This shouldn’t be getting the prominence that it is for Facebook has – albeit frustratingly – done absolutely nothing wrong. Business will look at ways to legally reduce their costs including tax bills and Facebook is no different to any other business. That said, it flies in the face of logic and is frustrating for any UK taxpayer that businesses, which earn their income in the UK, don’t pay tax on all of that income.
“The UK is one of the most advanced economies in terms of online advertising and it’s unlikely that businesses such as Facebook, Twitter, Google and others would pull out if they were made to pay tax in the UK. That’s a missed opportunity for the UK Gov’t which needs all the help it can to balance the books. It is said that only two things are certain in life; tax and mortality and whilst few can deny the value these internet businesses bring to everyone in the UK, it seems they have worked out how to avoid at least one of those certainties of life, for the time being at least.”

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