The tax man cometh and, in the case of Facebook in the U.K., he leaveth empty-handed, as The Guardian reported that the social network paid no taxes in the U.K. in 2012, despite seeing its income there rise by 70 percent, and despite accounting for nearly one-half of the £6 billion ($9.66 billion) that eMarketer projects for 2013 digital ad spending in the U.K.
The company is not breaking any laws or committing tax evasion: Since its international headquarters are located in Dublin, Facebook is able to funnel the majority of its U.K. income through Ireland, where corporation taxes are lower.
The Guardian reported that according to documents filed with the U.K.’s Companies House, Facebook booked just £35 million ($56.32 million) of its U.K. income in the U.K., up 70 percent from £20 million ($32.18 million) in 2011.
A Facebook spokesperson told The Guardian:
Facebook pays all taxes required by U.K. law, and we comply with tax laws in all countries where we operate and have employees and offices. We take our tax obligations seriously, and work closely with national tax authorities around the world to ensure compliance with local law.
Commons Public Accounts Committee Chairwoman Margaret Hodge told The Guardian:
This is yet another example of what appears to be deliberate manipulation of accounts of economic activity to deprive the British taxpayer of a rightful tax contribution, according to the profits they make in the U.K. I am getting fed up of this constant stream of stories and little sign of a challenge from HMRC (Her Majesty’s Revenue and Customs) and a strange silence from government.
What we have in mind is to find the criteria to define the taxable basis that we can attach to European territory. When we talk to Google or Facebook or the others … of course they are not happy about paying more corporate tax. But they are happy to agree to play by the rules. The thing that bothers them is uncertainty.
Readers: Are you surprised that loopholes exist allowing Facebook to lawfully pay no taxes in the U.K. despite its growth there?
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