Facebook Inc (FB) UK Pays Less Tax Than A London Teacher

To give that statement even greater resonance, the income tax paid by a London school teacher is equal to over $4,430. Not only was the company’s corporation tax bill pitifully small, it actually had a credit balance of $230,414 due to tax credits from previous years.

Facebook Inc (FB) UK Pays Less Tax Than A London Teacher

The figures

Facebook Inc (NASDAQ:FB) reported a pre-tax loss of $14.7 million in the UK last year, although its parent company, based in the U.S., filed a net profit of $1.5 billion. The loss of Facebook UK came from a turnover of $63.1 million, with a gross profit of $62.38 million.

You may be wondering how these figures add up to a loss, but that’s because we haven’t factored in the “administrative expenses” of $77.09 million, the majority of which due to stock-based payments to employees. Each of the 208 people employed by the company at the end of 2013 paid more personal tax than the company does.

Facebook’s tax loopholes

Facebook pays some of the top lawyers to advise them on how to minimize their tax bill. The Evening Standard cites a report from eMarketer which claims that Facebook Inc (NASDAQ:FB) in fact raked in around $470 million in UK revenues last year, a 67% year-on-year rise from 2012. Most of this was passed through Ireland, where corporate tax rates are among the lowest in Europe.

Companies such as Facebook Inc (NASDAQ:FB), Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) and Apple have come under increasing scrutiny for using accounting loopholes such as the “double-Irish” to shuttle money between various jurisdictions until the effective tax rate approaches zero.

Both national and European legislators have begun to focus more attention on the tax situation of large multinational companies, with the European Commission recently proposing an investigation into the dealings of Apple Inc. (NASDAQ:AAPL) and Amazon.com, Inc (NASDAQ:AMZN), among others.

For its part, the Irish government has promised to close the loopholes, but their announcement was met with skepticism. British citizens who are feeling disgruntled at the ability of large companies to wriggle out of their tax responsibilities can take comfort in the fact that they, as individual tax payers, are paying their fair share towards the NHS and other social services.

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About the Author

Brendan Byrne
While studying economics, Brendan found himself comfortably falling down the rabbit hole of restaurant work, ultimately opening a consulting business and working as a private wine buyer. On a whim, he moved to China, and in his first week following a triumphant pub quiz victory, he found himself bleeding on the floor based on his arrogance. The same man who put him there offered him a job lecturing for the University of Wales in various sister universities throughout the Middle Kingdom. While primarily lecturing in descriptive and comparative statistics, Brendan simultaneously earned an Msc in Banking and International Finance from the University of Wales-Bangor. He's presently doing something he hates, respecting French people. Well, two, his wife and her mother in the lovely town of Antigua, Guatemala. To contact Brendan or give him an exclusive, please contact him at [email protected]

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