Facebook paid £4,327 in corporation tax despite £35m staff bonuses | Tax evasion
Staff at Facebook’s UK branch earned an average of more than £210,000 last year in salaries and bonuses, while their employer paid just £4,327 in corporation tax.
Facebook made a book loss of £28.5million in Britain in 2014 after paying out more than £35million to its 362 employees under a stock bonus scheme, according to the latest published accounts of the unit. Operating at a loss, Facebook was able to pay less than £5,000 in corporation tax to HM Revenue for the year.
The share scheme was worth an average of over £96,000 for each member of staff. Once wages are taken into account, a British Facebook employee received on average more than £210,000.
The level of tax contribution from Facebook, which claimed in 2013 that at least a third of UK adults visit its site every day, will add to the debate over how to ensure multinationals pay fair taxes in every country in which they operate. Last year, Facebook made a profit from its global operations of $2.9bn (£1.9bn), on revenue of $12.5bn. UK revenues were £105million last year.
John Christensen, the director of the Tax Justice Network campaign group, said: “It’s very likely that they’re using all the usual techniques to shift profits.”
A Facebook spokesperson said: “We comply with UK tax law, and indeed in all countries where we have operations and offices. We continue to develop our business in the UK”. She added that all company employees paid UK income tax on their remittances.
Facebook recently secured the lease of a prestigious 227,324 square foot office space in Rathbone Square near Tottenham Court Road in London, where it plans to open a new headquarters in 2017.
George Osborne, the Chancellor, has pledged to tackle global corporate tax avoidance by swiftly legislating to enact a new set of rules drafted by the Paris-based Organization for Economic Co-operation and Development (OECD), which has become a hub for global tax reform in recent years.
The so-called BEPS rules aim to combat “base erosion and profit shifting”: the practices used by many global companies to minimize their tax liabilities by recording profits in jurisdictions with low tax rates. taxation.
The Chancellor has repeatedly cut corporation tax, which is levied on company profits, but he insists that in return all companies must pay their fair share to the Treasury. The main corporate tax rate was 28% when Osborne arrived at the Treasury, and it is 21% today.
“Taxes should be paid where profits are made,” Osborne tweeted at the International Monetary Fund’s annual meetings last week. “It is great to see the OECD BEPS rules agreed here in Lima. The UK will lead by example and implement early.”
Separately, the Chancellor has introduced a backdoor tax on profits, known as the “Google tax”, aimed at preventing international tech companies from minimizing their UK tax liability.
Christensen said these developments were likely to impact multinationals such as Facebook. “They are going to have to change the model. The Google tax will likely shut down some opportunities, and the BEPS rules are certainly a step in the right direction.
However, he criticized that while the new framework will require companies to reveal to authorities in their home country how much tax they pay in each jurisdiction in which they operate, this information will not be more widely available to public scrutiny.
The social and economic power of Facebook and its fellow Silicon Valley tech companies has come under increasing scrutiny in recent months.
Last week, the European Court of Justice struck down the 15-year-old “safe harbour” pact, under which US-based companies were allowed to hold the data of European citizens. Fears over US surveillance activities, revealed by whistleblower Edward Snowden, have heightened concerns about the role of Facebook and other social media platforms in protecting their users’ privacy.
Max Schrems, the Austrian privacy activist who brought the case, described it as “a puzzle piece in the fight against mass surveillance and a blow to tech companies who think they can take action. in complete ignorance of the law”.