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Mark Zuckerberg, founder and CEO of Facebook, addresses a gathering during the Internet.org Summit in New Delhi October 9, 2014. Facebook Inc, which closed its acquisition of mobile messaging service WhatsApp on Monday, has no near-term plan to make money from the service, Zuckerberg said on Thursday. REUTERS/Adnan Abidi (INDIA - Tags: SCIENCE TECHNOLOGY BUSINESS TELECOMS) - RTR49I7Z
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A London school teacher pays more UK tax than Facebook

By Leo Mirani

Facebook’s corporation tax in the United Kingdom for 2013 came to a grand total of £3,169 ($4,005). The company also received £185,196 in credits from previous years, leaving it with a credit balance of £182,027, according to documents filed with Companies House on Tuesday, Oct. 21.

The income tax paid by an inner London school teacher on the minimum starting salary of £27,543 comes to over £3,500.

Facebook reported turnover of £49.85 million, with a gross profit of £49.28 million. But some pesky “administrative expenses” piled up and came in at £60.9 million, largely due to stock-based compensation for its employees. Facebook employed 208 people in the UK at the end of 2013—and each one pays more personal tax than the company.

How does such a large, well-oiled and—in the US at least—profitable company manage to erase its entire profit for tax purposes? With the help of very good, very expensive lawyers. According to the Evening Standard, citing figures from eMarketer, Facebook made some £371 million in revenues in the UK last year, but booked most of those sales in Ireland, where corporate tax rates are among the lowest in Europe.

Large companies can use a complicated structure known as the “double-Irish” to move cash around various countries until the effective tax rate comes close to zero.

The actions of companies such as Facebook, Google, and Apple, among others, have attracted the ire of both local and European regulators and politicians. The European Commission has recently made noises about investigating the tax dealings of Apple and Amazon, among others, and Ireland has promised to phase out its loopholes (though not everyone believes it). In the meantime, however, residents of Britain—and much of Europe—can pat themselves on the back and feel wryly smug about contributing more to their country’s operations than some of the biggest companies in the world.

Facebook declined to comment.