Monday, 15 October 2012
Facebook avoided UK tax by routing £155m through Ireland in 2011
FACEBOOK AVOIDED PAYING higher corporation taxes in Britain by attributing most of its UK revenues to Ireland in 2011, a tax expert has claimed.
Private accounts filed in company house in London yesterday showed the social media company paid £195,890 in taxes on £20.4m in revenues last year, up from £13m in revenue in 2010. However independent research group Enders Analysis said Facebook’s British revenues would have been around £175m, with most of the revenue attributed to Ireland.
“We have a tax system (in the UK) that was designed in the age of the steamship. It is completely unable to organise how these international companies pay tax,” Richard Murphy of Tax Research UK told TheJournal.ie.
“£155m was billed in Ireland despite the company making sales of £175m to UK customers that were billed in the UK. That’s not how a tax system should work.”
The company’s London office is believed to attribute most of its UK revenues to its Dublin operation, where corporation tax is half the UK rate at 12.5 per cent.
However, Ireland is not collecting as much tax as it should be claimed Murphy, as some multinational companies were in turn routing their revenue out of the country.
“The absurd thing is that Ireland is being taken for a ride by some of these companies as well” he said. ”Google makes all its sales from Ireland but doesn’t make a profit in Ireland so it pays almost no tax. All the profit being made flows out in payments to Google Bermuda. That’s where the profits go.”
However, new rules could put an end to the practice of shifting revenues over borders. The Common Consolidated Tax Base, which the EU parliament voted overwhelmingly in favour of in April, would stop companies routing their revenues through Ireland if it becomes law.
“That would completely change the whole game that Ireland is playing.”