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Facebook pays more tax for its UK operations but experts remain sceptical

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By Tony Connelly | Sports Marketing Reporter

October 10, 2016 | 3 min read

Facebook paid £4.16m in corporation tax last year as it expanded its UK operations while working to appease public perception over the controversial amounts it has paid in previous years.

Mark Zuckerberg, Facebook

Facebook

The bill represents a significant increase on the £4,327 it paid in 2014, which evoked outrage from campaigners and prompted protests that called for change to how multinational companies are taxed.

The social network posted a taxable profit for the year ending 31 December 2015 of around $20m while turnover more than doubled to £210m.

A spokesperson for Facebook said: "We are proud that in 2015 we have continued to grow our business in the UK and created over 300 new high skilled jobs. We pay all the taxes that we are required to under UK law."

However, critics are likely to maintain pressure on Facebook given that the company will receive a tax credit of £11m, which can be used to offset tax bills at a later date.

While the latest tax bill is steeper, business analysts maintain that it still some way off what it should be paying given the amount of business being done by the company. Its payment is based on revenues from engineering and marketing services supplied to other parts of the Facebook group and does not include sales made over the internet.

Speaking to the BBC, tax specialist Jo Maugham QC described Facebook’s accounts as “rather opaque” and said the structure of its business continues to be “driven by the desire to make the smallest possible financial contribution to the public infrastructure it uses”.

As part of its ongoing efforts to reduce the negative perception stemming from campaigners, Facebook agreed earlier this year to book sales to major UK advertisers in Britain rather than Ireland meaning it will pay tax in the UK for that revenue.

The social network giant employed 682 people in the UK last year, up from 362 in 2014, and the company now has more than 1,000 full-time equivalent staff.

Facebook’s global profits for last year reached $3.7bn on revenues of almost £18bn, representing a 44 per cent increase on the previous year.

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