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Facebook UK profits could spark tax scrutiny

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Facebook’s UK business has swung back into profit, but is still likely to face further accusations that it doesn’t pay enough tax.

Annual results from Facebook UK showed company turnover quadrupling to more than £840m.

That remarkable rise is a result of advertising revenue from big British companies now being accounted for by the UK business, instead of being funnelled through its Irish arm.
The company’s administration costs also increased massively but it still recorded a pre-tax profit of £58.4m.
Twelve months earlier, it announced a loss of more than £50m
However, despite that turnaround, the company is still likely to face scrutiny over its tax bill.
Facebook UK listed its corporation tax liability as £5.1m, but used tax credits to halve that figure.
It also reduced its tax liability by setting off some share-based incentive schemes as business expenses.
Overall, it has paid total tax for 2016 of £2,577,082 – about 4.4% of its total pre-tax profit, and about 0.3% of its turnover.

The company figures reveal that it employed an average of 960 people during 2016, with a total wage bill of just over £104m.
That suggests that the average employee of Facebook UK is paid more than £108,000, before any bonuses are taken into account.
However, that figure has actually fallen since last year, when the average salary was over £114,000, suggesting that the rapid expansion of the company’s sales team has seen people being recruited on slightly less generous salaries.
If those figures seems high, it’s worth remembering that pay given to the directors of Facebook UK are not included in those statistics – they are all paid through other Facebook companies.
The company also paid out nearly £78m in share-based payments.
These results will add to the scrutiny that is now routinely paid on the tax paid by giant international technology companies.
By coincidence, Facebook UK’s company results came out on the same day that Amazon was being upbraided for an illegal tax agreement with Luxembourg, and when Ireland was told it would be taken to court for its failure to pursue Apple for €13bn of unpaid tax.

Source: SKY