Don’t hang your dirty laundry out on Facebook

/ Tax

Facebook is loved and hated by millions all over the world but has recently hit the headlines for paying only a few thousand pounds in corporation tax in the UK – £4,327 to be exact – someone who is on the average wage of £26,500 actually pays more. Facebook paid on average £210,000 in pay and bonuses to each of their staff in the UK and I assume they did pay income tax and national insurance. But something still does not tally up. Last year Facebook made a profit of $2.9bn (£1.9bn) worldwide on sales of $12.5bn, say £8.2bn. In the UK they reported sales in the UK of £105 million or around 1.25% of total sales but that allows of course for sales which might be re-directed via Ireland or Liechtenstein. But they employ about 362 staff in the UK out of a global workforce of some 10,000, which means that about 3.62% of their staff work in the UK.

So, based on these figures shouldn’t their profit be 3.62% or in other words £69m? If we take a 20% tax rate this would amount to £13.8m in tax. A fair bit more than £4,327 wouldn’t you agree?

I know the above is a rough estimate and there may well be a few good reasons why the actual profit figures might be lower, such as research or high set up costs for new offices etc. but £4,327 does not make sense and it does not feel right. If UK customers like to use Facebook then fine, but then UK customers should benefit and expect Facebook to pay its fair share of UK tax, just like every other business in the UK.

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