Written by: Keith Tully
Reviewed: Friday 4th March, 2016
Facebook has said that it will soon start paying more taxes to HM Revenue & Customs (HMRC) having been heavily criticised in recent months for the ways in which it manages its tax affairs.
The social media giant has been able to pay relatively very little corporation tax to the UK Treasury by routing payments from its largest advertisers through Ireland.
But that practice is set to be stopped with the company having made a commitment to register much higher taxable revenues in the UK.
“On Monday we will start notifying large UK customers that from the start of April they will receive invoices from Facebook UK and not Facebook Ireland,” a statement from the company explained.
Facebook’s large UK customers include the supermarket giants Tesco and Sainsbury’s, as well as the advertising and public relations multinational WPP, which is among the largest businesses of its kind in the world.
“In light of changes to tax law in the UK, we felt this change would provide transparency to Facebook’s operations in the UK,” statements from what is the world’s largest social media company said.
“The new structure is easier to understand and clearly recognises the value our UK organisation adds to our sales through our highly skilled and growing UK sales team.”
Ad-related invoice transactions involving smaller businesses in the UK will continue to be handled via Facebook Ireland, whose base is also the company’s headquarters for operations outside the US.
It was revealed recently that Facebook paid less than £5,000 in corporation tax in the UK for the year 2014, despite the fact that the company employs more than 850 people in Britain, who took home an average of £210,000 in remunerations during that same period.
On a global basis, Facebook has more than a billion monthly users and generates in the region of £1 billion in profits every three months but the company registered a loss of £28.5 million in the UK in 2014.
Another of America’s internet giants Google has also come in for widespread criticism of its UK tax affairs in recent weeks with it, like Facebook, accused of unfairly declaring profits made in Britain elsewhere to lower its overall tax bills.