Industry & Business

Facebook to pay more tax on UK revenues

Facebook to pay more tax on UK revenues

March 04
11:41 2016

facebookSocial media giant Facebook has announced it will stop routing sales from major UK customers through Ireland, in a move which is likely to result in a large increase in the amount of tax it pays in Britain.

The move comes after widespread criticism of multinational companies’ use of complex tax arrangements to minimise their liabilities.

Facebook said in a statement that the new arrangement – which will start in April – would provide greater “transparency”.

“On Monday we will start notifying large UK customers that from the start of April they will receive invoices from Facebook UK and not Facebook Ireland,” a spokesman for the company said.

“What this means in practice is that UK sales made directly by our UK team will be booked in the UK, not Ireland. Facebook UK will then record the revenue from these sales,” a spokesman for the company said.

There was no guidance from Facebook on how much additional revenue from advertisers can be expected to be routed through the UK or how much more tax the company will pay to the UK tax authorities as a result of the move.

The scale of the additional payment, which may run into millions of pounds, will not be known until official accounts are published in 2017.

Smaller advertisers who deal with sales staff based in Ireland will continue to receive invoices from Ireland.

Facebook attracted criticism after its results for 2014 showed it paid £4,327 corporation tax, which is charged at 20% on taxable profits.

The company’s accounts recorded UK revenues totalling £105m. But they showed it made an accounting loss of £28.5m in Britain, after it more than doubled its staff share bonus pot to £35.4m.

Facebook’s payment of £4,327 was less than a single UK worker on an average salary would have paid in income tax and national insurance.

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