Facebook Defends Paying Just £4,327 In Tax

Facebook (NasdaqGS: FB - news) has insisted it is complying with the law despite paying just £4,327 in corporation tax for the whole of last year.

The amount is less than the average UK worker, who with an annual salary of £26,500, would contribute a total of £5,393 through income tax and national insurance.

According to the company’s accounts, Facebook pushed itself into operating at a loss of £28.5m in Britain, following a payout of more than £35m to staff as part of a share bonus scheme.

The scheme meant Facebook’s 362 UK staff members took home an extra £97,790 each in 2014 - pushing their total pay packet to an average of £210,614.

The payouts, along with a profit base in Ireland (Other OTC: IRLD - news) , meant the firm was only liable for the small tax bill for the year, despite registering revenues of £105m.

Globally, Facebook made a profit of £1.9bn on revenues of £8.2bn in 2014.

A spokesperson for the company said: "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."

The company pointed out it was taxed on their profit figures, not the amount of revenue they generate in the UK, and argued that all of its UK staff paid tax on their income - including the money they received from the share bonus scheme.

Facebook is the latest in a long line of multinational firms to be criticised over the size of their UK tax bills.

Google (Xetra: A0B7FY - news) , Starbucks (Swiss: SBUX.SW - news) , Amazon and Vodafone have also come under fire in recent years.

In response, Chancellor George Osborne has pledged to crackdown on tax avoidance by large companies in the UK.

In March of this year, Mr Osborne announced he would be introducing a ‘diverted profits tax’, which would penalise companies that move their profits outside of the UK to countries with lower corporation tax rates in order to pay less to the Treasury.

The tax, nicknamed the ‘Google Tax’, came into effect in April (LSE: 0N69.L - news) 2015.

Mr Osborne also said he would be changing the rules of corporation tax to prevent companies contriving losses.

Speaking at the time he said: "Let the message go out - this country's tolerance for those who will not pay their fair share of taxes has come to an end."