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Facebook faces backlash over £7.4m UK tax bill

The chancellor is under growing pressure to impose tougher taxes on multinational firms following the publication of Facebook’s latest UK accounts.

Documents released on Monday showed the company paid a net £7.4m in corporation tax last year after an £8.4m credit for staff share awards cut the total from £15.8m.

Facebook had booked a 7.5% increase in pre-tax profits to £62.8m on revenues of almost £1.3bn – up almost a third on 2016.

It pointed to damage to profitability from a £759m cost of sales and £444m in “administrative expenses” that were not explained.

Facebook – like other US-based international companies – point out that taxes paid are within the legal frameworks of the nations in which they operate.

There have been multilateral efforts to ensure taxes are paid in the countries where the revenues are made but talks at the OECD are widely understood to have stalled.

At the Conservative Party conference last week, Chancellor Philip Hammond threatened internet giants with a new digital services tax to ensure they pay their fair share of the cost of public services.

Phillip Hammond makes his conference speech
Image: Phillip Hammond at the Conservative Party conference

The Sun newspaper used its front page on Tuesday to describe Facebook’s contribution to UK coffers as “sweet F all”.

Labour MP Margaret Hodge, who chairs the all-party group on responsible tax, said it was “absolutely outrageous that Facebook’s UK tax bill is 0.62% of their revenue”.

She added: “On an income of £1.2bn, they really should be paying much more than £7.4m.

Damian Collins, the Tory MP who chairs the Commons digital, culture, media and sport select committee told The Times: “Facebook should be paying a level of tax which more accurately reflects the value of their business in the UK.”

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Facebook says it has changed the way it reports tax so that revenue from customers supported by its UK team is recorded in the UK, and any taxable profit is subject to UK corporation tax.

The country, which it says is its biggest engineering operation outside of the US, is also planning to double its office space in London by 2022.

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