The largest social network in the world paid no corporation tax in the United Kingdom for the second year in 2013. At the same time, its staff received Facebook shares worth tens of millions of pounds. Facebook reported a pre-tax loss of £11.6m in Britain in 2013, while its American parent company reported a net profit of $1.5bn.
Facebook revenues in the United Kingdom increased by 43%, from £34.6m to £49.8m, according to the company’s latest financial filing. The social media company classifies its turnover as “marketing and engineering services”, as much of the company’s advertising revenues are funneled via Ireland in order to take advantage of much lower tax rates.
Facebook made £371m in advertising revenue in 2013, which is a 67% year-on-year rise from the £222m in 2012. In the meantime, Facebook UK incurred a corporation tax charge of as little as £3,169, while receiving a credit of £182,000.
Facebook UK employed an average of 172 British staff. The employees were paid £40.8m in 2013, which is almost double the 2012 figure of £21m. The company says this was due to a £15.5m payment cost for “share-based payments”. It is also known that British staff received 1.52m free Facebook shares that are worth $118m given their current share price of around $78. As of 31 December, 2013, there were also 2.2m shares worth more than $170m “outstanding”. As usual, the government once again made promises to change the laws and crack down on offshore tax avoidance.