Facebook paid £15.8m in tax in the UK last year after making a profit of £62.7m on record British sales of £1.27bn.
The social media giant’s accounts show that while Facebook increased its UK income by more than 50% in 2017, its pre-tax profits remained similar to 2016.
Accounts filed at Companies House show that Facebook UK Ltd made pre-tax profits of £62.7m on sales of £1.27bn in 2017. In 2016 the company made a £58.5m profit on sales of £842m. Profits were held back by the firm paying out £758m in “costs of sales” and £444m in administrative expenses.
Facebook, which is the world’s fifth-biggest company, with a market value of $454bn (£348bn), paid only £15.8m in tax. The tax bill is more than three times the £5.1m that Facebook paid in 2016 but it works out at only 1% of its total sales. Facebook also received £8.4m in tax credits from granting its employees shares in the company, meaning its net tax bill will be £7.4m.
Margaret Hodge, the Labour MP who has led campaigns against tax avoidance, said it was “absolutely outrageous” how little tax Facebook was paying in the UK.
Facebook’s latest UK results have been published as the chancellor, Philip Hammond, prepares to introduce a new digital services tax to prevent US tech firms such as Facebook, Google, Twitter and Amazon from moving sales income through other countries in order to cut their British tax bills.
Hammond is expect to outline proposals for the new tax during his budget speech on 29 October. It is thought that the plan will be for the tax to be based on the revenues of big technology firms rather than their profits, in order to stop companies routeing funds through other countries.
“Global internet giants must contribute to funding public services,” Hammond said during his speech at the Conservative party conference.
“The best way to tax international companies is through international agreements but the time for talking is coming to an end and the stalling has to stop,” he said. “If we cannot reach agreement, the UK will go it alone with a digital services tax of its own.”
Facebook’s head of northern Europe, Steve Hatch, said: “The UK is home to our largest engineering base outside the US and we continue to invest heavily here.
“By the end of 2018 we will employ 2,300 people in the UK and we are doubling our office space in London’s King’s Cross, with capacity for more than 6,000 workstations by 2022.
“We have also changed the way we report tax so that revenue from customers supported by our UK teams is recorded in the UK and any taxable profit is subject to UK corporation tax.”