Facebook commits paying more taxes, gets £11m tax credit


A credit of £11.3m had been awarded to Facebook UK by the end of 2015 after it has promised to contribute more to the British national treasury. This is given to balance future tax payments.

Although the social network reports a worldwide profit of £4.97bn, Facebook UK still shows up with a credit £11.3m at the end of the fiscal year in 2015 despite the charge of £4,327 in the previous year.

The social network’s British arm paid a corporation tax of £4.17m. However, accounting rule changes favored them with such tax credit. Accounts filed at the Companies House justifies this report.

This revelation is set to spark argument among legislators regarding the tax dues of U.S. multi-national companies in the U.K. Questions on this issue started after the Prime Minister made comments on the subject.

The reason Facebook ended with this £11.3m tax credit was its bonus scheme wherein it made some £15.5m of payments to its U.K. workforce. This, however, does not imply that HMRC owes the amount to Facebook. It can only help the company to amend tax dues on future profits.

This favor on Facebook by the government is entirely legal. It finds its defense on the changes on HRMC accounting rules. The social network had adopted these rules for the first time in the 2015 financial year.

The company also had incurred a loss of £52.5m before tax for 2015. This was comparably higher than the loss it had incurred in the previous year. This loss was due in part to the amount Facebook paid to its UK workforce in lieu of its share-based bonus scheme. The entire bonus amount Facebook UK paid its employees equated to £71m.

Theresa May highlights this issue in her speech at the Conservative Party last week. She exhorts that everyone must abide by the same rules. All, no matter how rich or poor, has a duty to pay their taxes. And she vowed that she will chase after those who would dodge over their dues.


Six months before this statement had been made, Facebook had already committed to pay more tax in the U.K. To materialize this claim, Facebook wrote its UK customers that it would begin billing them from the UK on April 1.

Ireland is known for lower tax rates which is commonly employed by many multi-national companies to cut the cost on tax expenditures. But Facebook is making a difference and fulfilling its commitment to pay more taxes to the UK. Hence, it will book their sales in the UK.

Albeit the legality of this treatment given to Facebook, it is still subject to scrutiny by tax campaigners and politicians. But the HMRC stands firm on its convictions. They are completely on their guard against these multinational companies. They will not allow these companies to escape from paying their taxes.

Facebook also assures that they will pay their tax dues.