Facebook to pay millions more in UK taxes as it revamps ad sales practices
Facebook will now pay millions more to HMRC after making fundamental changes to its sales structure to ensure that profits from the majority of its ad revenue initiated in Britain will be taxed in the UK.
The decision to stop routing UK sales through Ireland (where the firm has a Dublin HQ) follows criticism over how little tax the corporation was paying. Figures released last year revealed it had paid out under £5000 in UK taxes throughout 2014 despite the region being one of its largest markets outside the States.
The company’s total revenues surged 52 per cent year-on-year in the last quarter of 2015 as it reported earnings of $5.8m. Today’s shakedown will see revenue from some of the social behemoth’s largest advertisers – including WPP and Unilever – reported in the UK, meaning a higher proportion will go to the UK taxman.
According to the BBC, smaller businesses serving ads on the platform will still be invoiced via the firm’s Ireland offices.
Facebook said in a statement: “In light of changes to tax law in the UK, we felt this change would provide transparency to Facebook’s operations in the UK.
“The new structure is easier to understand and clearly recognises the value our UK organisation adds to our sales through our highly skilled and growing UK sales team.”
Other multinational firms like Google and Starbucks have been slammed for avoiding payment on their British sales, with the former arranging a £130m tax deal with David Cameron’s government earlier this year.
Back in February, WPP boss Sir Martin Sorrell questioned the “judgement” of companies accused of utilising “very aggressive” schemes to minimise their UK tax output.
“The chickens have come to roost because people have been very aggressive on their tax planning," he said. “Some people have judged it right, some people have judged it wrong."