Facebook is expected to pay millions of pounds in tax to the British government after a major overhaul of its tax structure.
Income from some of its largest advertisers will be taxed in the U.K. after the company stops routing profits through Ireland, a legal tax avoidance scheme known as “The Double Irish.”
Facebook’s U.K. revenue is subject to U.K. corporation tax. It paid just £4,327 ($6,116) in 2014 despite an annual profit of £1.9 billion ($2.7 billion.)
HMRC pays more for Facebook ads telling you to pay tax than Facebook pays in corporation taxhttps://t.co/pmFPJlAHo1
— Channel 4 News (@Channel4News) March 3, 2016
Channel 4 News revealed yesterday that the British tax man paid Facebook £27,000 ($38,600) last year for advertisements telling people to pay their taxes.
Facebook is just one of a long line of multinational companies to be criticized over the size of their U.K. tax bills, with Google, Starbucks and Amazon also coming under fire.
Facebook to pay millions of pounds more in UK tax https://t.co/qiQ33feNdJ #TREToday
— Stephen Ritson (@radioritson) March 4, 2016
British Chancellor of the Exchequer, George Osborne, pledged to crackdown on tax avoidance by introducing a “diverted profits tax” to penalize companies that move their profits outside of the U.K. to countries with lower corporation tax rates in order to pay less to the Treasury.
The tax penalty, nicknamed the ‘Google Tax’ came into effect in April last year.
HMRC accused of “acting as PR agency” for Google And Facebook over tax avoidance https://t.co/YKxHcGwOrU
— James Ball (@jamesrbuk) March 3, 2016
(Image: Reuters)
