Facebook channelled profits through a series of tax havens in order to pay just £2.9m of corporation tax on more than £800m of overseas profits in 2011, it has been reported.
Like Google and Apple the social networking site is said to have used its headquarters in Ireland to avoid tax liabilities in the UK before directing earnings to a subsidiary in the Cayman Islands.
British companies that buy advertising on Facebook must do so via Facebook Ireland Ltd which entitles the company to sidestep HM Revenue and Customs and authorities in other higher-tax jurisdictions, reported the Sunday Times today.
As a result less than £240,000 was paid to the UK taxman. The Dublin office, with a staff of 400 people showed a gross profit of £840million in 2011. Despite this, Facebook Ireland posted a loss of £15million for the year after hundreds of millions were routed to a subsidiary in the Cayman Islands and to its parent company in the U.S.
Labour MP John Mann recently spoke out about the company's actions, calling them 'disingenuous and immoral'.
'They benefit enormously from the country's internet infrastructure but do nothing to fund it. It's like driving a car with no tax. We would stand for it on our roads so why stand for it on the net?,' he said.
Accounts for Facebook Ireland revealed that last year £440m was moved into an Irish sister company before being diverted to a subsidiary company in the Cayman Islands. Read more >>
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