Facebook to Overhaul U.K. Tax Setup, Pay ‘Millions of Pounds’ More
Facebook will restructure its tax setup in the U.K., leading to millions of pounds of additional taxes, the company announced on Friday. The social media giant was panned last year when it was revealed that its 2014 U.K. tax bill was only 4,327 pounds ($6,128), the result of a “Double Irish” tax arrangement that routed advertising revenue through its Ireland office.
Starting in April, Facebook’s largest U.K. clients will be billed from Facebook U.K. and not Facebook Ireland, said the company in an internal memo reported by the BBC. “What this means in practice is that UK sales made directly by our UK team will be booked in the UK, not Ireland. Facebook UK will then record the revenue from these sales. In light of changes to tax law in the UK, we felt this change would provide transparency to Facebook’s operations in the UK,” said the memo.
The corporate restructuring means Facebook will generate larger revenues and pay Britain’s corporate tax rate, levied at around 20 percent.
The UK Treasury welcomed the change, saying in a press release, “The government is committed to making sure multinationals pay their fair share of tax. That’s why we’ve taken unprecedented action both domestically through introducing the diverted profits tax, and internationally through leading the world’s major economies to introduce new rules to tackle aggressive tax planning by multinationals.”
Facebook’s operations in the U.K. include 850 employees and a new headquarters under construction in London.