Facebook UK Paid £35m In Staff Bonuses, But Only £4,327 In Corporation Tax (gu.com)

New submitter Phil Ronan writes: After getting away with paying £0 corporate tax in 2013, Facebook UK has announced that its corporate tax payment for 2014 (total revenue: £105 million) is going to be £4,327. This is a tiny fraction of the £35 million pounds given away by the company in staff bonuses over the same period. "The share scheme was worth an average of more than £96,000 for each member of staff. Once salaries were taken into account, a British employee of Facebook received more than £210,000 on average. ... A spokesperson for Facebook said: 'We are compliant with UK tax law, and in fact in all countries where we have operations and offices. We continue to grow our business activities in the UK.' She added that all the firm’s employees paid UK income tax on their payouts."

Comments

Re: Facebook says it was just an honest mistake

[driblio]

Whoosh..... Try again.

Re:So the taxes were collected from salaries inste

[aaron4801]

Sort of, yes.
The thing is, Facebook and other massive transnationals (Google, Apple, etc) stow their IP in a country with very low corporate tax rates (Ireland and Cayman Isl. are common), then that parent company charges huge "management fees" or other fees to use the IP in the target country (UK in this scenario). So if they projected to make an annual profit of £100m in the UK, the Irish entity would charge £100m in fees. Facebook UK now makes no profit, but Facebook Ireland makes an additional £100m. Any additional profits can be handed out as bonuses (if they're going to lose a significant portion of the money anyway, they'd rather give it to employees than the government).
This is all completely legal, and has been the bane of politicians around the world for decades. If there were an easy fix, it would have been done by now.
Of course, that's just the ELI5 version, it all gets much more complicated when used in the real world. See here for more.