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Facebook Pays Less In Taxes In The U.K. Than The Average U.K. Employee

In 2014, Facebook spent a mere $6,643 on U.K. taxes–allegedly because the company is not profitable there.

Facebook Pays Less In Taxes In The U.K. Than The Average U.K. Employee
[Photo: Flickr user Howard Lake]

If you live in the U.K., there’s a strong possibility you pay more in taxes than Facebook does. Last year, the social networking giant spent just over $6,600 on corporation taxes in the U.K., where it has more than 30 million users and brings in $161 million in sales, according to Quartz. The average U.K. worker, on the other hand, pays almost $8,300 in taxes.

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Facebook claims that, despite bringing in profits of $701 million globally, it isn’t profitable in the U.K., which arguably explains its tax payments; taxes are paid on profits, not revenue. In a statement to the BBC, a Facebook spokesperson said the company is “compliant with UK tax law, and in fact in all countries where we have operations and offices. We continue to grow our business activities in the UK.”

But these tax numbers are indicative of why European officials are closely examining the tax practices of tech companies. Amazon, whose European headquarters are in Luxembourg, had a tax deal with the country that antitrust regulators deemed unfair and said was allowing the company to underpay taxes; soon after an investigation was underway, Amazon opted to pay taxes in other European countries as well, perhaps to stave off further scrutiny. Apple is currently the target of a similar investigation, due to concerns that it is receiving tax breaks in Ireland, where its European operations are based.

Facebook could be next, if its tax payments continue in the same vein. The company is already under fire in Europe for potential violations of user privacy; just last week, the highest court in Europe ruled that an agreement that allowed companies to transfer personal data from Europe to the U.S. was no longer valid. For companies like Facebook and Google, this could spell trouble as it gives more power to the authorities who have long tried to protect the privacy of European citizens.

[via BBC]

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About the author

Pavithra Mohan is an assistant editor for Fast Company Digital. Her writing has previously been featured in Gizmodo and Popular Science magazine.

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