Facebook ‘compliant’ despite paying £5,000 in UK tax

Facebook has said it is complying with the law, despite paying less than £5,000 (€6,750) in UK corporation tax last year.

The social media giant’s UK arm paid just £4,327 in company taxes, according to its latest published accounts.

A single UK worker, on an average salary of £26,500 (€35,775), would pay £3,180 in income tax and £2,213 in national insurance contributions, which is more than Facebook’s payment.

Accounts show that in 2014 the company, which has its European headquarters in Dublin, made an accounting loss of £28.5m in Britain, after paying out £35m to its 362 staff in a share bonus scheme — worth an average of £96,000 for each member of staff.

Facebook said it takes tax obligations seriously and works closely with officials.

A spokesman said: “We are compliant with UK tax law and, in fact, all countries where we have employees and offices. We continue to grow our business activities in the UK.”

Globally, Facebook made profits of $2.9bn (€2.55bn), on revenue of $12.5bn, in 2014. UK revenues were £105m.

Director of the TaxPayers’ Alliance group, John O’Connell, said: “Taxpayers will be justifiably confused and angry about this tax bill. But Facebook is right to say that it is complying with UK law, which shows that the problem lies with our complex tax code, and that is what politicians should address as a matter of urgency.

“We have to ensure our taxes are simple, to eliminate loopholes, and that taxes are low, to increase our competitiveness, so that companies choose to base themselves here.”

Other global companies have come under fire for tax avoidance, including Starbucks, Amazon, Google and Vodafone.

In April, UK chancellor George Osborne said firms that move their profits overseas to avoid tax would be subject to a “diverted profits tax”.

The so-called Google tax discourages large companies from diverting profits out of the UK to avoid tax.

Firms such as Apple, Google, and Starbucks have all been criticised for low European tax payments.

Mr Osborne said in April: “Let the message go out — this country’s tolerance for those who will not pay their fair share of taxes has come to an end.” He added he would be closing tax loopholes that enabled businesses to take account of foreign branches when reclaiming VAT on their overheads.

The chairman of the British public accounts committee, Meg Hillier, said: “We are keen to ensure every large corporation pays its fair share of tax and abides by the spirit, not just the letter, of the law.

“With the nation tightening its belt and further significant cuts indicated by the forthcoming spending review, the PAC will continue to follow the evidence on tax and look closely at the issues raised.”