facebook controversy alter the structure of advertising sales in the UK
Facebook is to pay millions of pounds more in UK tax after changing parts of its controversial Irish structure to book more advertising sales in Britain.The change follows criticism of the social media giant's tax structure which has seen it divert sales to its low-tax base in Ireland, and pay just £4,327 in UK tax in 2014.Like Google and several other US technology groups, Facebook books much of its European revenues in Ireland, which has a lower corporation tax rate than Britain.But from April it will record sales from its largest UK advertisers in Britain, meaning that it will pay more tax from 2017.
The move follows Google’s announcement that it will pay £130m in back taxes to HMRC, a deal that has been heavily criticised for letting Google off easily.Facebook's advertising sales in the UK were around £800 million in 2015, according to estimates from eMarketer. Although Facebook will not reportedly book all UK advertising revenue in Britain, only those from its biggest clients, the move means revenues and profits at Facebook's UK subsidiary will be much higher.In 2014, the most recent figures, Facebook UK Ltd registered revenue of just £105 million, and recorded a £28.5 million loss. Its tax payments were just £4,327. In the same year it made a $2.9 billion (£2 billion) profit worldwide.An internal document to staff says: “On Monday, we will start notifying large UK customers that from the start of April, they will receive invoices from Facebook UK and not Facebook Ireland.“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.“The new structure is easier to understand and clearly recognises the value our UK organisation adds to our sales through our highly skilled and growing UK sales team.”
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