Finance

Facebook coughs up £4.2 million in UK tax, earns £11 million in credit

The social media giant may have handed over a reasonable chunk to the tax man -- but now the company has millions in credit to avoid future payments.

Written by Charlie Osborne, Contributing Writer Oct. 10, 2016 at 12:01 a.m. PT

Facebook paid £4.16 million in UK corporation tax last year, but also earned £11 million in tax credits which may spark a fresh debate surrounding UK corporate tax and companies eschewing large payments.

As reported by the BBC, the social media giant paid a total of £4.16 million in the 2015 fiscal year in tax, a vast increase over the paltry £4,327 Facebook paid in 2014.

The company's latest tax figures were posted by Companies House (.PDF) over the weekend. While turnover has reached £210 million, Facebook paid tax on profits of approximately £20 million at the UK's standard corporation tax rate.

However, £4.16 million may not silence all critics of the company for using loopholes to legally pay minimal taxes to the UK government and the UK's tax department HMRC in the past, as Facebook was also able to earn approximately £11 million in tax credits -- which can be used to pay UK taxes in the future.

Facebook acquired the tax credits through offsetting roughly £15.5 million in payments relating to employee bonus schemes.

Speaking to the publication, a Facebook spokesperson said:

"We are proud that in 2015 we have continued to grow our business in the UK and created over 300 new high-skilled jobs. We pay all the taxes that we are required to under UK law."

In 2014, Facebook, Starbucks, and Amazon prompted public outrage over small tax contributions the companies made to UK coffers, despite business booming in the country and high sales levels. Facebook does appear to be attempting to appease the taxman by raising the bill, but the 2015 accounts do not tell the whole story.

The accounts are based solely on engineering and marketing sales, but do not include sales to UK advertisers. These sales, which would push the bill up much higher, are routed through Ireland.

By booking sales through Ireland, the social media giant has been able to take advantage of very low corporate tax rates.

However, Facebook vowed this year to route these sales through Britain from April 1, which means they would be subject to UK tax -- and this, in turn, may appease critics and UK investigators.

Facebook now employs over 1000 people in the United Kingdom.