Facebook's 2014 UK Tax Bill
October 12, 2015 2:27 PM Subscribe
Social network giant Facebook paid just £4,327 ($6,643) in corporation tax in 2014, its latest UK results show.
Its most recent Companies House filing shows the company as making a pre-tax loss of £28.5m last year, but the firm also paid its 362 UK staff a total of £35.4m in share bonuses.
pfffttt, amateurs. Amazon does much better, in 2013 it received more from the UK government in grants than it paid in tax. As David Mitchell pointed out, that practically makes tax avoidance a work of art.
"It's a challenging artwork, but instead of oil paint or wood or clay or the excrement of the artist, it's constructed out of pure injustice. A huge, malevolent sculpture of unfairness, ground-breaking and thought-provoking, reminding us of the iniquities of the natural world – a corporate metaphor for the worms that will one day eat all of our corpses. Like any really important work of art, it's bound to upset a few people ... We can work ourselves up in impotent fury or – and this is a calmer way to live – just sit back and enjoy the majesty of a terrible thing done well. Amazon's tax and grant arrangements are the beautiful ivory candlestick revealed by the silhouettes of British taxpayers' incredulous faces."
posted by memebake at 2:50 PM on October 12, 2015 [27 favorites]
"It's a challenging artwork, but instead of oil paint or wood or clay or the excrement of the artist, it's constructed out of pure injustice. A huge, malevolent sculpture of unfairness, ground-breaking and thought-provoking, reminding us of the iniquities of the natural world – a corporate metaphor for the worms that will one day eat all of our corpses. Like any really important work of art, it's bound to upset a few people ... We can work ourselves up in impotent fury or – and this is a calmer way to live – just sit back and enjoy the majesty of a terrible thing done well. Amazon's tax and grant arrangements are the beautiful ivory candlestick revealed by the silhouettes of British taxpayers' incredulous faces."
posted by memebake at 2:50 PM on October 12, 2015 [27 favorites]
International tax law = comprehensively broken.
posted by GallonOfAlan at 2:54 PM on October 12, 2015
posted by GallonOfAlan at 2:54 PM on October 12, 2015
What are the odds that this was possible with entirely legal tax avoidance, as opposed to illegal tax evasion?
(Contrary to "Conservative MP Mark Garnier", I don't think "the spirit of the law" is that the government deserves X% of your total wealth. If the law has very a specific and complex network of deductions, benefits, penalties, different taxes for different types of money, then you have no legal or moral duty to put all your money in the highly-taxed areas.)
posted by Rangi at 2:54 PM on October 12, 2015
(Contrary to "Conservative MP Mark Garnier", I don't think "the spirit of the law" is that the government deserves X% of your total wealth. If the law has very a specific and complex network of deductions, benefits, penalties, different taxes for different types of money, then you have no legal or moral duty to put all your money in the highly-taxed areas.)
posted by Rangi at 2:54 PM on October 12, 2015
Oh I'm sure its legal, Rangi. All kinds of other crazy stuff used to be legal in the UK too, until people made a fuss about it.
posted by memebake at 2:58 PM on October 12, 2015 [3 favorites]
posted by memebake at 2:58 PM on October 12, 2015 [3 favorites]
There's a reason any actor worth their salt doesn't accept net points. Because any asshole can make themselves look like a loser to the appropriate moron. Return of the Jedi Inc makes zero money but LucasFilm still makes billions.
We're done with net. Halve the corporate tax rate and just start taking the gross in a progressive nature. If it's good enough for us it's good enough for them.
posted by Talez at 3:00 PM on October 12, 2015 [13 favorites]
We're done with net. Halve the corporate tax rate and just start taking the gross in a progressive nature. If it's good enough for us it's good enough for them.
posted by Talez at 3:00 PM on October 12, 2015 [13 favorites]
It's entirely legal. HMRC have been up and down it. As I said, tax law is not fit for purpose in the modern world.
posted by GallonOfAlan at 3:04 PM on October 12, 2015 [1 favorite]
posted by GallonOfAlan at 3:04 PM on October 12, 2015 [1 favorite]
Yes, it's the lack of tax harmonisation across the European single market and the unsuitability of tax arrangements for ecommerce. So, Facebook and Google can (and do) base their UK advertising servers in Ireland and bill from there (the business being deemed to have been conducted there, rather than where the ads are viewed) thus benefiting from Ireland's low taxes. The UK treasury actually misses out twice, both from the lost corp tax and lost VAT.
posted by sobarel at 3:11 PM on October 12, 2015 [1 favorite]
posted by sobarel at 3:11 PM on October 12, 2015 [1 favorite]
Legal. International tax law needs a comprehensive review. There are all kinds of principle decisions on which nations don't agree, and the disagreements make it possible for corporations to "shop" to find the countries which are best for them for their various capabilities. And shouldn't they? It's also massively complex for international companies and it isn't as if the governments have any moral high ground to occupy. A lot of the tax complexity is caused at the national level, by laws which are less about protecting the tax base of the population and more about whatever national agenda is blowing hot at the moment.
posted by frumiousb at 3:40 PM on October 12, 2015 [1 favorite]
posted by frumiousb at 3:40 PM on October 12, 2015 [1 favorite]
Its most recent Companies House filing shows the company as making a pre-tax loss of £28.5m last year, but the firm also paid its 362 UK staff a total of £35.4m in share bonuses.
How much tax did the UK staff pay on their £35.4m in bonuses? If Facebook had wanted, couldn't it have paid out £28.5m less to its employees in bonuses, still showed a profit of zero, and so paid little or no corportation tax? If so, doesn't that mean that Facebook's bonus plan resulted in more total tax revenue for the government?
posted by The Tensor at 3:52 PM on October 12, 2015
How much tax did the UK staff pay on their £35.4m in bonuses? If Facebook had wanted, couldn't it have paid out £28.5m less to its employees in bonuses, still showed a profit of zero, and so paid little or no corportation tax? If so, doesn't that mean that Facebook's bonus plan resulted in more total tax revenue for the government?
posted by The Tensor at 3:52 PM on October 12, 2015
They are paying the £4327 so that the NHS can buy something nice.
posted by a lungful of dragon at 4:03 PM on October 12, 2015 [6 favorites]
posted by a lungful of dragon at 4:03 PM on October 12, 2015 [6 favorites]
Apparently the UK's tax code is one of the lengthiest and most complicated in the developed world. Some say this is deliberate, so that very important persons can, at the cost of hiring some sharp accountants and lawyers, always find a way out of the indignity of having to pay tax.
posted by acb at 4:06 PM on October 12, 2015 [1 favorite]
posted by acb at 4:06 PM on October 12, 2015 [1 favorite]
you have no legal or moral duty to put all your money in the highly-taxed areas
It always amuses me that the Government wants to appeal to morality when it is us paying them, but when it comes to the other way around, like caring for the poor and needy, suddenly the same principles don't seem to apply.
posted by 43rdAnd9th at 5:34 PM on October 12, 2015 [7 favorites]
It always amuses me that the Government wants to appeal to morality when it is us paying them, but when it comes to the other way around, like caring for the poor and needy, suddenly the same principles don't seem to apply.
posted by 43rdAnd9th at 5:34 PM on October 12, 2015 [7 favorites]
If so, doesn't that mean that Facebook's bonus plan resulted in more total tax revenue for the government?
Yep, and all the moreso because individual rates are higher than corporate rates.
posted by jpe at 5:42 PM on October 12, 2015 [1 favorite]
Yep, and all the moreso because individual rates are higher than corporate rates.
posted by jpe at 5:42 PM on October 12, 2015 [1 favorite]
sobarel: The VAT loophole was closed earlier in the year (remember the “VAT Mess” kerfuffle?). Now you’re required to pay VAT according to the EU country your customer resides in, rather than where you happen to have located the “charging” part of your business.
Of course, a multinational client can now choose to buy-in their Facebook or Google ad spend from a low VAT country, so I’m not entirely convinced this is going to be the great revenue raiser that the EU hopes, but it’s probably better than it was before.
As others have pointed out, Facebook has paid out a ton of UK tax in the form of employee taxes & VAT. If the UK government wants them to pay corporation tax then they need to fix those rules as well.
posted by pharm at 12:15 AM on October 13, 2015
Of course, a multinational client can now choose to buy-in their Facebook or Google ad spend from a low VAT country, so I’m not entirely convinced this is going to be the great revenue raiser that the EU hopes, but it’s probably better than it was before.
As others have pointed out, Facebook has paid out a ton of UK tax in the form of employee taxes & VAT. If the UK government wants them to pay corporation tax then they need to fix those rules as well.
posted by pharm at 12:15 AM on October 13, 2015
Facebook UK's 2015 filing is the top document linked from this page.
Facebook UK reports a revenue of £105 million (presumably in UK-specific advertising sales) but operating costs of £131.5 million, hence the reported loss. Despite such a loss, its net assets are £16 million, up from £9 million last year.
It paid £9 million in 'social security costs', which I am assuming represent its National Insurance contributions in respect of its employees (that seems consistent with the reported wage bill of £41 million).
£41 million wages for 362 employees suggests an average wage of £113k (!!!). At that level you are probably paying tax and NI of about £45k per annum - say £16 million across all its employees.
So, Facebook UK's business is probably sending HM Revenue & Customs about £9 million directly and another £16 million through taxes on its employees' wages. In other words, that £105 million a year of revenue is resulting in £25 million a year entering the public purse.
posted by Major Clanger at 1:23 AM on October 13, 2015 [1 favorite]
Facebook UK reports a revenue of £105 million (presumably in UK-specific advertising sales) but operating costs of £131.5 million, hence the reported loss. Despite such a loss, its net assets are £16 million, up from £9 million last year.
It paid £9 million in 'social security costs', which I am assuming represent its National Insurance contributions in respect of its employees (that seems consistent with the reported wage bill of £41 million).
£41 million wages for 362 employees suggests an average wage of £113k (!!!). At that level you are probably paying tax and NI of about £45k per annum - say £16 million across all its employees.
So, Facebook UK's business is probably sending HM Revenue & Customs about £9 million directly and another £16 million through taxes on its employees' wages. In other words, that £105 million a year of revenue is resulting in £25 million a year entering the public purse.
posted by Major Clanger at 1:23 AM on October 13, 2015 [1 favorite]
It paid £9 million in 'social security costs', which I am assuming represent its National Insurance contributions in respect of its employees (that seems consistent with the reported wage bill of £41 million).
To be fair, when the National Insurance comes out of my wages, it is coming out of MY WAGES. I am paying my National Insurance and income tax, not my employer. I earned that money and am now paying some to the government. These taxes are taxes on my profit as an employee, not the company's profits as a company.
posted by EndsOfInvention at 3:56 AM on October 13, 2015 [4 favorites]
To be fair, when the National Insurance comes out of my wages, it is coming out of MY WAGES. I am paying my National Insurance and income tax, not my employer. I earned that money and am now paying some to the government. These taxes are taxes on my profit as an employee, not the company's profits as a company.
posted by EndsOfInvention at 3:56 AM on October 13, 2015 [4 favorites]
Maybe all corporate taxes should be collected out of employees weekly salary and corporations have to pay out a certain percentage of their gross income out in salary or else lose their corporate charter for 1 year in any municipality that they do business.
posted by any major dude at 5:35 AM on October 13, 2015 [1 favorite]
posted by any major dude at 5:35 AM on October 13, 2015 [1 favorite]
I was at a pub quiz last night in a small, but popular Glasgow pub. One of the question was "Who paid more corp tax in 2014? Facebook or us?" - the small, but popular pub did. They also paid more than Starbucks, unsurprisingly.
posted by kariebookish at 5:42 AM on October 13, 2015 [4 favorites]
posted by kariebookish at 5:42 AM on October 13, 2015 [4 favorites]
Did that pub lose millions of pounds in 2014?
posted by The Tensor at 7:49 AM on October 13, 2015
posted by The Tensor at 7:49 AM on October 13, 2015
Remember that any wages you earn aren't yours, but your employer's.
posted by a lungful of dragon at 8:17 AM on October 13, 2015 [1 favorite]
posted by a lungful of dragon at 8:17 AM on October 13, 2015 [1 favorite]
To be fair, when the National Insurance comes out of my wages, it is coming out of MY WAGES.
Technically, there is an extra bit of NI that the Employer pays in addition to the bit that you pay. Its about 10% to 14% and its called Employers NI, as opposed to the Employee NI that you pay
posted by memebake at 1:52 PM on October 13, 2015 [1 favorite]
Technically, there is an extra bit of NI that the Employer pays in addition to the bit that you pay. Its about 10% to 14% and its called Employers NI, as opposed to the Employee NI that you pay
posted by memebake at 1:52 PM on October 13, 2015 [1 favorite]
Related to tax haven shopping, the OECD recently released a report including a set of proposals to stem lost tax revenues. This is a project that has been years in the making. Global taxation and tax justice is a complex problem, so the OECD report is certainly drawing critical commentary:
- Tax Justice Network: "Much also depends on the politicians, who will decide what changes to make, and what resources to provide for tax authorities to play their part in the game. Governments are ambivalent about this, even hypocritical. Many have been calling for action to end international tax loopholes, and even enacting laws to do so, generally responding to public opinion and tax justice campaigns. But on the other hand, they also talk of national ‘competitiveness’, and are concerned that tax measures should not discourage investment, responding in this case to business pressures. This contradictory attitude helps to explain the nature of the BEPS project package, which was weakened as each government tried to protect its preferred tax breaks for business."
- BBC.com: "Companies should pay tax in the countries where they conduct business under new proposals intended to cut corporate tax minimisation. An OECD/G20 report found laws allowing companies to shift profits to low-tax jurisdictions means that between $100bn and $240bn is lost annually." (one of the related stories linked in the FPP article)
posted by cynical pinnacle at 10:34 AM on October 14, 2015
- Tax Justice Network: "Much also depends on the politicians, who will decide what changes to make, and what resources to provide for tax authorities to play their part in the game. Governments are ambivalent about this, even hypocritical. Many have been calling for action to end international tax loopholes, and even enacting laws to do so, generally responding to public opinion and tax justice campaigns. But on the other hand, they also talk of national ‘competitiveness’, and are concerned that tax measures should not discourage investment, responding in this case to business pressures. This contradictory attitude helps to explain the nature of the BEPS project package, which was weakened as each government tried to protect its preferred tax breaks for business."
- BBC.com: "Companies should pay tax in the countries where they conduct business under new proposals intended to cut corporate tax minimisation. An OECD/G20 report found laws allowing companies to shift profits to low-tax jurisdictions means that between $100bn and $240bn is lost annually." (one of the related stories linked in the FPP article)
posted by cynical pinnacle at 10:34 AM on October 14, 2015
« Older "Time to retire the 'firewater' fairytale" | Say no to this. Newer »
This thread has been archived and is closed to new comments
posted by Wordshore at 2:46 PM on October 12, 2015 [6 favorites]