Facebook has decided to pay more UK tax too

The social network is the latest online giant to bow to criticism that it should cough up.

by Rebecca Smith
Last Updated: 09 May 2016

Facebook, you might have heard, has had a change of heart when it comes to its tax structure. Now the majority of the advertising revenue it generates in Britain will be taxed in the UK rather than Ireland. Could it be a sign that the billionaire execs at the helm of massive corporations may have more of a conscience than the general public thought?

Well, maybe. In this case, it’s probably more of an indication Zuckerberg and co. weighed up the potential reputational cost this ongoing controversy was going to cause and decided it significant enough to make a change.

What prompted such a potentially costly volte face? Well the revelation by Channel 4 News that   Facebook earns six times as much from HMRC for running ads telling people to pay up, as the firm itself pays in tax may have had something to do with it. It's not the first time it's been i trouble over tax either - it paid a mere £4,327 in corporation tax in the UK for 2014. 

Facebook's troubles seem to keep mounting - in the past month it’s also been embroiled in a German cartel probe, had its Latin America vice-president arrested in Brazil and been involved in quite a ding-dong in India that resulted in Facebook's Free Basics service being banned. It’s been the subject of a recent report by a wildlife monitoring network, concerned that Facebook has become an online marketplace for trade in endangered species. Oh and Mark Zuckerberg’s now facing a criminal complaint from German lawyers over anti-Semitic speech by users on the social networking site. Phew.

So a bit of good PR would be welcome for the company. Facebook said that, ‘On Monday we will start notifying large UK customers that from the start of April they will receive invoices from Facebook UK and not Facebook Ireland.’ Apparently the move has been planned for some time but its timing is pretty handy. 

This should mean Facebook UK generates significantly higher revenues and as a result pays more corporation tax. The first bill next year will show just how much more. The UK does represent less than 10% of Facebook’s global revenue, but Britain is one of its biggests markets outside the US. 

So all being well, niether Zuckerberg nor any of his execs will have to suffer the fate of Google Europe boss Matt Brittin, grilled so hard recently by the public accounts committee that he apparently couldn't remember his own salary.

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