Facebook will pay the UK under £15.7m in tax this year despite record revenues, as politicians continue to scrutinise the company's business model.
The tech giant saw UK revenues of more than £1.26bn, but corporation tax is paid on profits rather than revenues and Facebook saw its profits suppressed by spending £758m to bring in sales and another £444m on administrative expenses.
This left the company with a meagre operating profit of £62m, barely above the £58m it recorded in 2016, although its tax bill is more than triple the £5.1m it paid into the taxman's coffers back then.
Facebook will not pay the full £15.7m, however – its net tax charge will be only £7.4m due to HMRC rules allowing the company to offset tax on profits against employee share awards.
The offset stands in contrast to Amazon, which has raised the minimum wage for its employees in the UK and as such has increased its own tax footprint by pulling share benefits.
In a statement, Facebook's regional director of northern Europe Steve Hatch said: "The UK is home to our largest engineering base outside the US and we continue to invest heavily here.
"By the end of 2018 we will employ 2,300 people in the UK and we are doubling our office space in London's King's Cross with capacity for over 6,000 workstations by 2022.
"We have also changed the way we report tax so that revenue from customers supported by our UK teams is recorded in the UK and any taxable profit is subject to UK corporation tax."
The perception that technology companies do not pay enough tax to cover their societal footprint has prompted politicians to consistently threaten to levy funds from them to tackle numerous issues.
Home Secretary Sajid Javid has warned that he won't be scared to legislate against technology companies if they fail to meet his demands on child protection.
Chancellor Philip Hammond has suggested introducing a "digital services tax" on technology companies due to the lack of income being produced through corporation tax.
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At the same time, the Treasury is currently running a panel – led by former US president Barack Obama's chief economic adviser, Professor Jason Furman – to examine competition in the tech sector.
Meanwhile, Labour leader Jeremy Corbyn has suggested introducing a digital licence fee which technology companies and internet providers would pay in order to operate.
Facebook will pay the UK under £15.7m in tax this year despite record revenues, as politicians continue to scrutinise the company's business model.
The tech giant saw UK revenues of more than £1.26bn, but corporation tax is paid on profits rather than revenues and Facebook saw its profits suppressed by spending £758m to bring in sales and another £444m on administrative expenses.
This left the company with a meagre operating profit of £62m, barely above the £58m it recorded in 2016, although its tax bill is more than triple the £5.1m it paid into the taxman's coffers back then.
Facebook will not pay the full £15.7m, however – its net tax charge will be only £7.4m due to HMRC rules allowing the company to offset tax on profits against employee share awards.
The offset stands in contrast to Amazon, which has raised the minimum wage for its employees in the UK and as such has increased its own tax footprint by pulling share benefits.
In a statement, Facebook's regional director of northern Europe Steve Hatch said: "The UK is home to our largest engineering base outside the US and we continue to invest heavily here.
"By the end of 2018 we will employ 2,300 people in the UK and we are doubling our office space in London's King's Cross with capacity for over 6,000 workstations by 2022.
"We have also changed the way we report tax so that revenue from customers supported by our UK teams is recorded in the UK and any taxable profit is subject to UK corporation tax."
The perception that technology companies do not pay enough tax to cover their societal footprint has prompted politicians to consistently threaten to levy funds from them to tackle numerous issues.
Home Secretary Sajid Javid has warned that he won't be scared to legislate against technology companies if they fail to meet his demands on child protection.
Chancellor Philip Hammond has suggested introducing a "digital services tax" on technology companies due to the lack of income being produced through corporation tax.
More from Facebook
At the same time, the Treasury is currently running a panel – led by former US president Barack Obama's chief economic adviser, Professor Jason Furman – to examine competition in the tech sector.
Meanwhile, Labour leader Jeremy Corbyn has suggested introducing a digital licence fee which technology companies and internet providers would pay in order to operate.
