Facebook criticised over 'outrageous' UK tax bill
Despite reporting a record £1.65 billion in revenue last year, Facebook paid just £28.5 million in UK corporation tax. The social media giant reportedly made £96.6 million in profit in 2018, that’s up 54% and in spite of the Cambridge Analytica scandal. Their tax bill therefore rose to £30.4 million but after adjustments, was lowered by £1.9 million.
Low tax bill dubbed 'outrageous'
MP Margaret Hodge criticised the low bill, saying it was ‘outrageous’. Fellow MP John McDonnell, Labour's shadow chancellor, also raised concerns about the low amount, asking how ‘many more examples of large-scale tax avoidance does this government need before it will take action?' He goes on to add, ‘it’s no wonder people are outraged at the grotesque unfairness of our tax system.’
In Facebook’s defence, their vice president for Northern Europe Steve Hatch, said, ‘the UK is now one of Facebook's most important hubs for global innovation. We continue to grow and invest heavily in the UK and by the end of the year we'll employ 3,000 people here.’ He goes on to add that ‘businesses across the country use our platforms to grow and revenue from customers supported by our UK teams is now recorded here so that any taxable profit is subject to UK corporation tax.’
Current tax laws outdated
Companies that do business in multiple countries are currently able to structure their company in a way that allows them to pay tax in the most economical way possible. The Organisation for Economic and Development (OECD) has proposed upgrading the international tax system to reflect the demands of the 21st century. It claims existing tax rules date back to the 1920’s and are hardly fit to ensure fair taxation of large multinationals such as Facebook. Part of their plans involve reallocating some profits and taxes to the countries where firms make their biggest sales, countering current tax-planning strategies some use to exploit gaps in the rules.
Facebook isn’t the only multinational facing criticism about their tax bills. Last year, Amazon paid just £14.1 million in UK corporation tax while reporting £2.3 billion in sales, Google paid £66.8 million on profits of £246 million and Apple paid £3.8 million tax on £1.2 billion in sales.
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