Campaigners have called on the government to take more drastic action on corporate tax, after it emerged that social media giant Facebook paid less than £5000 in tax in the United Kingdom previous year.
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The move pushed the firm into a £28.5 million accounting loss, meaning that it paid just £4,327 in corporation tax.
To do so, it handed out £35.4million worth of shares onto its British staff, making their employees’ average remuneration package worth approximately £200,000.
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”. This is being widely derided as a desultory sum for a company that reported revenues of £105m from United Kingdom activities a year ago. A year ago Facebook’s worldwide profits were £1.9 billion.
However, this is just a small fraction of revenue that its American parent books from United Kingdom companies advertising on its site.
A worker earning the average British salary of £26 500 would have paid £5 393 in combined income tax and national insurance.
This is because Facebook showed that its operating at a loss in the United Kingdom, thereby diminishing its tax bill.
Facebook gave its British staff an average of more than £210,000 in pay and bonuses past year, according to its latest accounts.
The tax bill is up from last year – when it paid no corporation tax at all, for the second year running.
The company also pointed out that its employees paid tax on their income, including share awards.
The so-called “Google Tax” is created to discourage large companies diverting profits out of the United Kingdom to avoid tax.
John O’Connell, director of the Taxpayers’ Alliance, said: “Taxpayers will be justifiably confused and angry about this tax bill”.
“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”.
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The chancellor George Osborne has said that the United Kingdom could introduce the rules as soon as next month.
