The numbers showing just how much Facebook has paid Britain in taxes has some people outraged and other utterly confused, but the problem seems to be in the legislation, and not in the companies themselves.
According to a report by the Daily Star, the biggest social media site in the world, Facebook, has paid £4,327 to the British Government last year. At the same time, the company earned more than £100m from advertising and other forms of revenue.
How did it manage do get away with this? It was able to cut its tax bill by reporting an accounting loss of £28.5million, having handed out £35.4million to its workers through a share bonus scheme.
Facebook commented on the news, saying it has done nothing wrong. A company’s spokesperson says: “We are compliant with UK tax law and in fact all countries where we have employees and offices. We continue to grow our business activities in the UK.”
So how much money does an average tax payer in Britain give to the state? £5,500 in tax – over £1,000 more than Facebook was forced to pay. According to the Mirror, an average salary in the UK is £26,500.
Facebook’s 362 UK staff earned an average of £210,000 in pay and bonuses last year.
John Christensen, the director of campaign group the Tax Justice Network, said: “it’s very likely they’re using all the usual techniques to shift profits around.”
George Osborne, the chancellor, has pledged to crack down on tax avoidance by global firms by swiftly legislating to enact a new set of rules drafted by the Paris-based Organisation for Economic Co-operation and Development (OECD), which has become a hub for global tax reform in recent years, The Guardian wrote in a report.