FACEBOOK PAID £0 in corporation tax in the UK last year, despite making an estimated £371 million (€470 million) in revenue in the region in 2013, its latest financial filings with Companies House reveal.
None. Zero. Zilch. Nada.
Facebook is among other US companies such as Amazon and Starbucks that have been criticized in recent years because they generate substantial revenues in the UK but only pay a small amount (or in this case, nothing at all) in corporation tax.
Facebook, like some of its US technology counterparts, funnels its UK sales via its Ireland subsidiary where corporation tax rates are lower, at 12.5%.
In the UK the rate in 2013 was 24%.
This has previously been the case with Facebook.
According to the annual report and financial statements Facebook filed Tuesday with Companies House, the company declared £49.8 million in revenue in last year (up from $36.55 million in 2012, when it also paid no corporation tax). Research company eMarketer, however, has estimated Facebook generated £371 million in UK revenue in 2013.
The official filings also declare that Facebook posted an operating loss of £11.6 million in 2013. That’s up a substantial amount from the $3.85 million loss it posted in 2012 — a period it has previously said was “an anomaly year” given the costs associated with its IPO. Corporation tax is only paid if a company posts a profit.
The company would have had to pay a UK corporation tax charge on its loss for the year of $5,089 (£3,169), but that was wiped out by a $292,024 (£182,027) adjustment credit made on previous periods.
The document says that this year’s “anomaly” accounting for its operating loss was “share based payments”, paid out to its 208 London staff, who have received big compensation packages as the company continues to perform well worldwide.
It took a “share based payment charge” of £15.5 million. In total, UK employees collected 1.5 million free shares last year, currently worth $119 million based on the company’s current stock price.
Wages and salaries for its staff totalled £21.99 million, meaning the mean average annual Facebook UK employee salary was almost £106,000. It’s worth bearing in mind that all UK employees pay personal taxes on their income and stock-based compensation to the UK’s HM Revenue and Customs.
Facebook declined to comment.
It has previously been suggested that Facebook had taken advantage Double Irish tax structure here in Ireland.
Minister for Finance Michael Noonan moved to close this controversial tax loophole in Budget 2015, has pitched a new “knowledge-development box” to lure business investment instead.
- Lara O’Reilly, additional reporting by Nicky Ryan
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