Who paid more tax last year: you or Facebook?
Facebook may have made a fortune last year, but you'll be shocked at how small its tax bill was.
Facebook paid less tax than the average UK taxpayer last year.
The social media giant paid a paltry £4,327 in Corporation Tax in 2014, while British workers earning the average salary would have paid over £5,000 on their income in Income Tax and National Insurance contributions.
According to its latest Companies House filing, the firm made a loss of a whopping £28.5 million in the UK last year, which is why it only had to hand over such a small amount of Corporation Tax.
Yet it handed out £35.4 million in shares to employees in Britain as part of a bonus scheme. Those shares are worth about £96,000 on average for each member of staff.
Last year Facebook made a profit of almost £2 billion worldwide.
Crackdown
The Government has talked of cracking down on firms that don't pay their fair share of tax, but this news calls into question whether it is really doing enough. Google, Amazon and Starbuck are all being investigated by the European Commission over how they pay tax in Europe, with warnings that the Commission could widen its probe further.
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So the government only got £4k in corporation tax. Yet they managed to get £71 million from Facebook uk division in Income Tax , National Insurance and Employers National Insurance and the media is upset because that meant less profit for corporation tax. You realise that the salary/bonuses that contributed to the profit loss are taxed at an effective rate of 55% whilst corporation tax is 20%. And Income Tax etc is paid monthly not annually 9 months in arrears. Find something real to whinge about.
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Whether there is evidence of certain corporations not paying the tax they should or not isn't the point. The point is that these corporations are finding legal but highly dubious ways of negating their profits. Usually through schemes like having their coffee beans ground and coporate accounts produced in Luxemburg at some multiplier of the cost of doing it in the UK or the classic £b charge from the parent company for using the corporate logo, as if they could trade as that company wiothout usinging it. How that can be a charge against tax I leave to your (tax lawyers') imagination.
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Did Facebook pay the correct amount of UK Corporation Tax according to the law? If they did, as a U.S., not UK, corporation, they cannot be criticised for managing, indeed minimising, their tax exposure, as all corporations and individuals (encouraged by lovemoney) avoid tax legally. Only tax evasion is illegal and presumably, the writer is not accusing anyone?
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13 October 2015