Facebook pays less tax in the UK than I do

A tangled web.
A tangled web.
Image: Reuters/Dado Ruvic
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Facebook continues to grow its revenue, reach, and staff. But in the UK, where the social network boasts more than 30 million users and generates £105 million ($161 million) in sales, it pays less tax than I do. Just me, a journalist. What gives?

The short answer is because Facebook’s UK operations don’t turn a profit, according to its latest accounts (pdf). When contacted by Quartz, Facebook said it was unfair to compare the amount of tax it pays relative to revenue, because taxes are only paid on profits. However, given that the company’s UK sales more than doubled last year, it doesn’t seem irrelevant to mention them:

Facebook also more than doubled its headcount in Britain last year, to 362 people. And it pays those people very well:

These costs help explain Facebook’s losses. Wages, bonuses, and share awards amounted to £86 million last year, or well over £200,000 per employee. In addition to other costs and transfers to various Facebook subsidiaries, the UK business lost £28 million for the financial year:

Facebook UK also made a loss the previous year, the year before that, and the year before that. In 2014, it paid just £4,372 in corporation tax:

Facebook’s US parent company reported a $2.9 billion profit last year, on $12.5 billion in global sales. A spokesperson for Facebook said in a statement: ”We are compliant with UK tax law and in fact all countries where we have employees and offices. We continue to grow our business activities in the UK.”