Facebook ‘immoral’ for paying tax bill of £238,000

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Facebook has been accused of “immoral” behaviour after accounts showed that the social media giant paid a corporate tax bill of just over £238,000 last year, despite estimated revenues of £175m.

Facebook has been accused of

Facebook’s accounts also showed that the social networking group’s London arm reported a pre-tax loss of £13.9m last year, against a £1.1m profit in 2010. Photo: Alamy


By Telegraph Staff

9:20AM BST 11 Oct 2012

Accounts filed with Companies House show Facebook’s London office paid £238,317 in tax, down from £424,651 the previous year. The amount represents less than 1pc of its 2011 revenues.

Labour MP John Mann said that it was “disingenuous and immoral” for companies like Facebook to make large sums of money, yet “not pay tax in the countries where they are based.

“They benefit enormously from the country’s internet infrastructure but do nothing to fund it. It’s like driving a car with no tax. We would stand for it on our roads so why stand for it on the net?” he told the Independent.

Facebook is not the only company that has been highlighted for paying low rates of corporation tax Accounts show that Google paid just £6m of corporation tax in the UK last year.

Speaking at the Edinburgh Television Festival in 2011, Eric Schmidt, executive chairman of Google, admitted: “It’s true we could pay more tax, but we would have to do so voluntarily.”

Facebook’s accounts also showed that the social networking group’s London arm reported a pre-tax loss of £13.9m last year, against a £1.1m profit in 2010.

The drop came as Facebook enjoyed estimated UK advertising sales of £175m last year, according to independent researchers Enders Analysis.

However, the accounts showed that the company’s UK bill for staff costs and wages went from £7.9m to £24.8m, even as its workforce edged up only from 81 to 90. That represents a bill of some £275,000 a head.

The increased staff costs included a £15m “share-based payment charge”, which is thought to cover employees’ income tax and national insurance on the Facebook shares they received before the company floated in New York in May.

Facebook said that its local operations’ filings do “not necessarily present a full account of overall global financial performance”.

The glimpse into the company’s books emerged as Facebook’s troubled $104bn (£65bn) flotation faced renewed scrutiny after it emerged that it only disclosed more information about key parts of its business because US regulators pressed it to do so.

Correspondence between the Securities and Exchange Commission and Facebook and its lawyers show how regulators had to press the social network for more information on how it counted users, among other issues. It is not uncommon for the SEC to ask for more information from companies that are seeking to go public. Facebook declined to comment.


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