Facebook denies avoiding paying tax on Irish earnings

Facebook Ireland has denied avoiding tax despite paying only a fraction on record revenues of nearly €8bn last year. A spokesperson for the social media giant’s Irish operations yesterday said “we do not avoid tax”.

Newly filed accounts show revenues and pre-tax profits, at Facebook’s main Irish subsidiary, soared to record levels last year.

However, Facebook Ireland Ltd’s 2015 tax bill, of €16.53m, represented a tiny fraction of its record revenues of €7.89bn.

The 63%, or €3bn, increase in revenues coincided with pre-tax profits rising eight-fold from €12.82m to €109.57m.

Facebook’s Irish revenues represented 56% of its global turnover of $17.93bn last year. The social media network currently has more than 1.1bn daily active users and employs 1,500 people here.

It was reported, last weekend, that the company is on the lookout for a new headquarters here with capacity for another 1,000 jobs.

Facebook Ireland’s tax bill jumped from €3.4m to €16.53m last year on the back of the sharp rise in profits.

The comparatively low profits generated by Facebook Ireland are due to the firm’s very large administrative expenses paid out to other Facebook entities in royalty payments and fees.

The Irish-based company’s administrative expenses for last year rose by €3bn to €7.7bn. That total was largely made up of royalties payable to another Irish Facebook firm for the use of the Facebook platform; service and management fees to Facebook Inc and the costs associated with the increase in headcount.

The spokesperson said that the tax bill “represents an effective tax rate of 12.8% in line with the statutory tax rate of 12.5%”.

“There are strict accounting and tax rules in Ireland that all companies have to comply with,” said the spokesperson.

“We follow these rules and pay all the taxes that we are required to under Irish law. We do not avoid tax. We comply with all tax laws in the countries in which we operate.”

Head of Facebook Ireland, Gareth Lambe said: “We are proud that, in 2015, we have continued to grow our business and focus on our goal of connecting the world. The increase in our revenue is attributable to growth in advertising from the international business community that advertise on our platform.

“2016 has been an exciting year as we continue to invest in Ireland and concentrate on our advantages as a talent hub and centre of excellence.”

Staff costs at Facebook Ireland last year increased from €62m to €77.5m.

The company’s cashpile reduced from €729m to €659m.