4 Mar 2016 10:30am

Facebook set to pay millions more in UK corporate tax

Facebook will start paying millions of pounds more to UK tax authorities in a bid to provide greater transparency

The multinational has decided that its UK sales will get booked in the UK, where it will record the revenue and profit from these sales.

Before, profits from its largest advertisers including Unilever, WPP and Tesco, were taxed in Ireland.

The new structure is expected to generate more revenue in the UK than previously, the company said.

A new London headquarter is underway and is the first engineering centre outside the US. However, the company will still be headquartered in Ireland and sales from smaller businesses will still be routed through there.

Facebook confirmed on Friday it has started notifying large UK customers that the changes will be made from April, meaning they will receive invoices from Facebook UK and not from its Irish division. The first higher bill is expected to be paid next year.

The move follows increasing global pressure on Facebook’s tax affairs and the recent changes in tax rules. Nevertheless, the company said the move was not about back taxes, but about promoting more transparency.

Facebook paid just £4,327 in UK corporation tax in 2014, despite paying British staff an average of £210,000.

A Facebook spokesperson said, “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.

"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."

Internal sources told the BBC that the move is not a reaction to the Google settlement and that the new structure has been discussed with HMRC but no deal has been formally agreed.

Jessica Fino

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