Facebook Set To Pay Millions More In UK Tax

Facebook (NasdaqGS: FB - news) is to pay millions more in tax after overhauling its structure, the company has confirmed.

The social network giant was the subject of controversy last year when it was revealed that it paid just £4,327 in corporation tax in 2014.

That was against UK revenues of £105m in 2014 - a year where it made a profit on its worldwide operation of almost £2bn.

It (Other OTC: ITGL - news) has confirmed that under new arrangements, the majority of its advertising revenue initiated in Britain will now be taxed in the UK.

But there was criticism from Liberal Democrat economics spokeswoman Baroness Kramer, who said it showed the UK corporation tax system was "fundamentally broken".

Sales will no longer be routed through Ireland (Other OTC: IRLD - news) for Facebook's largest advertisers, but revenues from smaller business sales still will.

The changes should mean a higher UK corporation tax bill. They are due to come into effect in April so the first tax bill under the new structure will come in 2017.

How much more tax this means Facebook will pay has not been made clear.

But according to figures from data firm DueDil, Facebook UK paid £855,832 in tax from 2007-2014.

:: It made a pre-tax loss of £54,186,962 in that period, and its most recent turnover (according to 2014 figures) was £105m.

:: In Ireland from 2008 to 2014, Facebook Ireland paid €14,868,000 (£11,505,549) in tax and it made a pre-tax profit of €3,270,000 (£2,530,619) in that period.

:: Facebook Ireland's most recent turnover (according to 2014 figures) was €4.837bn (£3.743bn).

The latest move by Facebook comes after search engine Google reached a controversial deal with tax authorities to pay £130m in taxes going back 10 years. Critics say the sum is derisory.

Facebook's 2015 worldwide results posted earlier this year showed revenue climbed 44% to $17.93bn (£12.6bn) while net income rose 25% to $3.69bn (£2.59bn).

Facebook said: "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.

"What this means in practice is that UK sales made directly by our UK team will be booked in the UK, not Ireland. Facebook UK will then record the revenue from these sales."

It said the changes would provide "transparency".

HM Revenue & Customs did not comment specifically on Facebook , but said it "closely examined" firms to ensure they pay tax due in the UK.