Its huge salary bill, including a £35m staff share scheme, mean that Facebook officially made an accounting loss of £28.5m in Britain and therefore sidestepped paying much corporation tax.
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The social media giant’s United Kingdom arm paid just £4,327 in company taxes according to its latest published accounts.
The scheme meant Facebook’s 362 United Kingdom staff members took home an extra £97,790 each in 2014 – pushing their total pay packet to an average of £210,614.
A spokesman for Facebook said the firm was “compliant with United Kingdom tax law and in fact all countries where we have employees and offices”.
Facebook’s account show its United Kingdom business notched up £105million in annual sales previous year, which mainly came from advertising.
The latest revelations will fuel the debate over how big firms, such as Facebook, pay their fair share in each country in which they operate.
The Sunday Times pointed out that a single person earning £26,500 – the average United Kingdom wage – generates £3,180 in income tax and £2,213 in national insurance.
Companies including Google, Amazon and Starbucks have been in the firing line for their use of offshore jurisdictions to drive down their United Kingdom tax liabilities in recent years.
John Christensen, the director of campaign group the Tax Justice Network, said it is “very likely they’re using all the usual techniques to shift profits around”.
“But the problem lies with our complex tax code, and that is what politicians should address as a matter of urgency”.
HM Revenue and Customs (HMRC) released figures last October estimating the gap between the amount of tax collected and the sum owed had grown to £34 billion.
Last week the OECD unveiled new measures to stop large companies from exploiting loopholes in the global tax system.
Chancellor George Osborne has announced plans to crack down on firms that pay low tax.
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Google, Apple and Facebook are among companies to have been criticised for paying little or no tax, albeit doing so within the bounds of the law.
