Facebook pays £5.1m in corporation tax as revenue quadruples

A woman on Facebook
A woman on Facebook

Facebook’s UK operations paid just £5.1 million in corporation tax last year, despite a jump in profit and revenues nearly quadrupling on the back of climbing ad sales.

The social media giant said revenues in the UK jumped from £210.8 million to £842.4 million for the year to December 31, helping pre-tax profits rise from £52.5 million to £58.4 million for the period, according to accounts filed at Companies House.

But its UK corporation tax only rose to £5.1 million from £4.2 million a year earlier, and once deductible expenses were applied, the company only paid £2.58 million.

Facebook said the sharp rise in revenue was “attributable to the commencement of advertising reseller services” by its UK operations in April 2016, which drew in “large UK customers”.

The slight increase in corporation tax came after Facebook was publicly criticised for contributing only £4.3 million in tax in 2014 under an arrangement that treated the UK operation’s revenues as a payment from Facebook Ireland for services.

Routing sales through Ireland meant the social media giant was liable to corporation tax at a lower rate, but the firm announced last April that it would end the practice.

The company subsequently made voluntary changes to how much tax it pays after mounting pressure from campaigners.

Commenting on the latest accounts, a Facebook spokesman said: “Last April, we actively chose to reorganise our company structure to record revenues from our large UK sales customers in the UK.

“We believed this would provide greater transparency on our operations in London and be easier for people to understand. These accounts reflect that change.

“We continue to invest and expand in the UK, employing 1,500 people in our new offices by the end of this year, which is also home to our largest engineering base outside the US.”

Facebook UK said in its accounts that it employed an average of 960 people in any given month, covering its engineering team, sales support and marketing staff.

By the end of December, Facebook said it had increased its headcount to 1,065 staff.

It subsequently paid out nearly £207 million to staff, up from £165 million a year earlier, covering wages, salaries, social security, pensions and share award schemes.

However, its directors were paid by other Facebook entities as they served as senior executives in other parts of the business.

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