Facebook Faces UK Tax Questions

Posted: Updated:
Print Article
FACEBOOK
Alamy

CORRECTION: An earlier version of this story reported that the average salary of Facebook's UK employees was £275,000. Facebook has contacted us to say this is incorrect. The figure used to calculate the average salary as listed in its annual report to Companies House does not include only salary, but also includes a share-based payment charge which was incurred when Facebook went public. As such it does not accurately reflect the average salary of Facebook's UK employees, which is lower than originally reported.

Facebook has been accused of taking the UK taxpayer "for a ride" after it was reported to have paid just £195,890 in tax in 2011.

The website reported revenues of £20.4m in the UK in 2011, which is lower than than £175m which some experts said the firm had made.

Facebook UK reported a £10.2m loss in the UK last year overall - which it admitted do not present "a full account" of how the business is performing.

The Guardian quoted the blog 'Tax Research UK' as saying the social network was taking the UK "for a ride".

Tax Research UK, operated by accountant Richard Murphy, has previously written about the apparent disparity between a company's UK operation and its tax bill.

In Facebook's case, the explanation is said to be that most of its sales are officially booked in the Republic of Ireland, via its headquarters in Dublin.

The newspaper suggested that only 11% of Facebook's advertising revenues are booked in the UK, and that the UK-based company was only paid a commission.

Facebook UK also charged £15.4m for awarding its staff share options.

Quick Poll

Should Facebook pay more tax?

VOTE

A spokesperson for the company told the Guardian that it selected Dublin for its headquarters based on it being "the best location to hire staff with the right skills to run a multilingual hi-tech operation serving the whole of Europe".

Enders Analysis estimates that Facebook made close to £175 million in 2011, rising to £236 million in 2012.

Labour MP John Mann said it was "disingenuous and immoral" for Facebook to pay so little tax.

"They benefit enormously from the country's internet infrastructure but do nothing to fund it. It's like driving a car with no tax. We would stand for it on our roads so why stand for it on the net?" he said to the Independent.