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Facebook Paid Less Tax in the UK Last Year Than the Average British Worker

The internet giant paid just $6,600 in British tax last year after making a pre-tax loss of $43.8 million — helped by distributing $54.4m in share bonuses between its 362 UK employees.
October 12, 2015, 3:05pm
Foto di Peter DaSilva/EPA

While Facebook employees in the UK seem to be raking it in with an average of 210,000 pounds ($322,611) each last year in pay and bonuses, the company paid just 4,327 pounds ($6,647) in corporation tax over the same period.

This means that Facebook paid less tax in 2014 than the average British worker, who paid 4,985 pounds in income tax.

The internet giant distributed 35.4 million pounds in share bonuses between its 362 UK staff last year, contributing to a pre-tax loss of 28.5 million pounds there, which allowed the company to reduce its British tax bill, according to the Guardian.

Markus Meinzer, senior analyst at the Tax Justice Network, said: "These kind of structures, they are always claimed by corporate lawyers to be fully legal."

He said that recent changes in British law, particularly the diverted profits tax, or "Google tax," is supposed to act to "prevent multinationals from taking an overly aggressive tax avoidance scheme," but it clearly isn't currently working.

Related: How Corporations Are Costing Africa Billions Through Tax Schemes

Meinzer also said that the legality of Facebook's actions in this incidence "would be needed to be subject to review by a tax audit and only afterwards one would be able to assert" that they are allowed.

"They have not been proven to be illegal but the test has yet to be done that they are fully legal," he added.

John O'Connell, director of the Taxpayers' Alliance, told the BBC: "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."

"It's about the spirit of the law versus the letter of the law," Conservative MP Mark Garnier, a member of Parliament's Treasury Select Committee said. "At the end of the day tax evasion is illegal, when you're deliberately setting out to not pay your tax by hiding your money."

Related: Unhappy Meal: How McDonald's Is Using Luxembourg's Tax Laws to Supersize Its Profits in Europe

_Follow Sally Hayden on Twitter: _@sallyhayd