Facebook and eBay are among a number of corporations that are currently being scrutinised in the UK regarding how little they have paid in corporate tax while their businesses have thrived in the region.
The social network paid £4.2 million in corporate tax during 2015 which represents merely a faction of the £210 million it reported in UK revenue. Facebook though is still under fire for paying only £4,327 in taxes during the previous year.
A spokesperson for the company however highlighted the ways in which it is contributing to the UK's economy, saying: “We are proud that in 2015 we have continued to grow our business in the UK and created over 300 new high-skilled jobs. The UK is now home to some of the most innovative technologies in the world, including our investment in a high-tech solar-powered plane centre in Somerset that will help bring the internet to remote areas of the world.”
When it came to corporate taxes in the UK though, Facebook attempted to dodge further criticism, saying: “We pay all the taxes that we are required to under UK law.”
The e-commerce company eBay managed to pay less in corporate taxes than Facebook even though it earned significantly more revenue in the UK. It paid £1.1 million in UK taxes on sales of revenues over £1.1 billion. The way that eBay and other large tech companies are able to get away with paying so little in tax is through routing its revenue generated in the UK through another country where the tax rates are significantly lower.
In its annual report, eBay acknowledged that some of its subsidiaries operate from locations with more favourable tax rulings: “We benefit from tax rulings concluded in several different jurisdictions, most significantly Switzerland and Luxembourg. These rulings provide for significantly lower rates of taxation on certain classes of income and require various thresholds of investment and employment in those jurisdictions.”
As outrage continues to build over companies paying low corporate tax rates in the UK and EU, it is likely that other big tech companies will be ousted for following in the footsteps of Facebook and eBay.
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