Facebook pays less tax than Britain’s average worker

The San Francisco-based social media giant paid its 362 staff working in London about £210,000 each in salary and bonuses last year through a share bonus scheme, The Sunday Times reported. The move pushed the firm into a £28.5 million accounting loss, meaning that it paid just £4,327 in corporation tax. Last year Facebook’s worldwide profits were £1.9 billion.

Profits generated from British clients go to its international headquarters in Ireland, which channels them to a sister organisation in the Cayman Islands, which does not levy corporation tax, according to The Sunday Times.

Meg Hillier, a Labour MP and chairwoman of the Commons’ public accounts committee, said: “It’s another example of a large multinational running rings around the tax laws. At the PAC we are keen to make sure the taxpayer gets its dues so these are issues we will continue to pursue.”

Stewart Jackson, a Conservative MP and vice-chairman of the all-party parliamentary group for responsible taxation, said that tax avoidance was not just seen as unethical but could have a big impact on reputation and consumers’ choices. Facebook “would be wise to consider this and perhaps review its policy”, he said.

Last week the Organisation for Economic Co-operation and Development unveiled an action plan to stop countries around the world from losing as much as $240 billion a year in corporation tax. This was endorsed by the G20 group of nations at the International Monetary Fund’s meetings in Peru, with George Osborne promising a fresh crackdown on tax avoidance.

The chancellor pledged to use “future fiscal events” to put internationally agreed measures into law. “What it goes to is trust, trust that our citizens have in the fairness of our tax systems,” he said. “People are fed up when they see international businesses avoiding paying tax in any jurisdiction. This is not about whether you have low taxes or high taxes; this about paying your taxes.”

Labour is setting up a review of Revenue & Customs to ensure that all multinational corporations pay their fair share of taxes, if it comes back into power. John McDonnell, Labour’s shadow chancellor, said: “It’s depressing to hear that such a large company and household name like Facebook could be contributing so little in tax revenues to the UK.”

A spokesperson for Facebook said: “We are compliant with UK tax law, and in fact in all countries where we have operations and offices. We continue to grow our business in the UK.”