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March 4, 2016updated 05 Sep 2016 7:45am

Facebook to pay millions more in UK tax as HMRC continues tech tax clampdown

News: Move follows agreement with Google for tech giant to pay £150 million in back taxes.

By Alexander Sword

Facebook will pay more tax in the UK after an overhaul of its tax structure.

Profits from most of Facebook’s advertising revenue initiated in Britain will now be taxed in the UK rather than being routed through Ireland, which has a much lower corporation tax rate.

According to the report in the BBC, this will see the social networking giant paying tax on sales to big companies such as Unilever, Tesco, Sainsbury’s and WPP.

However, smaller business sales through online booking will remain in Ireland.

The overhaul will take place in April and Facebook will pay its first higher tax bill in 2017.

Facebook came under fire in October after it was revealed that it paid less than £5000 in corporation tax in 2014.

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The internet mogul’s UK operation paid its 362 staff shares worth £35.4 million, pushing the firm into an accounting loss and allowing it to slash its corporation tax bill.

According to the report in the Sunday Times, HM Revenue and Customs collected only £4327 from Facebook in 2014, less than is paid by many UK workers.

An HMRC spokesperson said at the time: "HMRC are clear that multinational companies must pay the tax that is due and we do not settle for less.

"That is why the government has led the way in taking action to ensure multinational companies pay their fair share of taxes."

Moves by tech giants such as Facebook, Amazon and Google, as well as other multinationals such as Starbucks to avoid tax are attracting increasing scrutiny from public bodies.

Google, which has also faced considerable controversy over its tax affairs, recently negotiated a deal with HMRC that saw it pay £130 million in back taxes.

Google has also now changed its accounting structure so that a larger proportion of sales are booked in the UK rather than Ireland.

 

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