Business

Facebook's UK tax bill rises to £5.1m

Facebook logo Image copyright AFP

Facebook paid £5.1m in tax in the UK last year, up from £4.2m in 2015, following a major overhaul of the social media firm's tax structure.

In April 2016, the company began booking more advertising income via its UK office, instead of in Ireland.

That significantly boosted revenue and profits for its UK business.

The publication of Facebook's 2016 tax accounts comes as pressure mounts on fellow tech giants Apple and Amazon over their tax arrangements in Europe.

EU authorities are pursuing global technology companies over what they see as unfair avoidance of tax in the countries where they have most customers by routing business through lower tax jurisdictions.

Facebook UK's 2016 accounts

  • Revenues: £842m (compared with £210m in 2015)
  • Profits: £58m (compared with £52m in 2015)
  • UK tax bill: £5.1m (compared with £4.2m in 2015)

In the UK, there was outrage after it transpired that, despite a fast-growing commercial presence in Britain, Facebook had paid just £4,327 in tax in 2014.

In 2015, the government introduced a "diverted profits" tax, a higher rate of corporation tax aimed at companies that use "contrived" structures to move profits out of the country.

Facebook paid a significantly higher tax bill in 2015 and, since then, has changed the way it books its revenues for the UK.

From April last year, larger advertisers such as supermarkets and multinationals have been invoiced by Facebook UK. Smaller companies that book ad slots online, with little staff support, continued to have their sales routed via Facebook's Ireland office.

"We believed this would provide greater transparency on our operations in London and be easier for people to understand. These accounts reflect that change," a Facebook spokesperson said.

Facebook has expanded its presence in the UK over the last year, investing in a new headquarters and employing more than 1,000 staff.

Related Topics

More on this story