Facebook (NASDAQ: FB) have released their latest UK accounts, showing revenues of £1.65 billion on the back of strong marketing and advertising growth.
The social media firm showed huge profit growth in excess of 54% with recognized sales of £797 million. Whilst pretax profit rose more than 50% from £63 million to £97 million.
Facebook UK in a statement said that net revenue from advertisers rose 50% meaning that 12% of sales were converted into profit.
This follows the latest US Multinational Corporation to avoid paying taxes using legal loopholes.
Amazon (NASDAQ: AMZN), Starbucks (NASDAQ: SBUX) and Vodafone (LON: VOD) have all been found guilty.
The social media titan, founded my Mark Zuckerberg has had a history of using legalities to avoid paying taxes they owe.
The fragile tax system involving payment by Multinational Corporations meant that the Treasury only received £28 million in corporation tax
Steve Hatch, the Facebook Vice President for Northern Europe said “Businesses across the country use our platforms to grow and revenue from customers supported by our UK teams is now recorded here so that any taxable profit is subject to UK corporation tax”
He added ““The UK is now one of Facebook’s most important hubs for global innovation. We continue to grow and invest heavily in the UK and by the end of the year we’ll employ 3,000 people here. These high-skilled jobs are not only working on products like WhatsApp and Workplace but also help develop technology to proactively detect and remove malicious content from our platforms.”
Facebook have backed up their bold revenue figures, with investment into Europe and somewhat into the UK.
The UK division of Facebook spent £356m on research, development and engineering in the UK last year.
With Hatch saying “Businesses across the country use our platforms to grow and revenue from customers supported by our UK teams is now recorded here so that any taxable profit is subject to UK corporation tax.”
Since the rise of Multinational Tax Avoidance, the Organization for Economic Development (OECD) have looked to impose tighter regulations so firms pay their legal duties.
Standard need to be met where both UK and overseas firms have consistent tax laws.
Giles Derrington, TechUK’s policy chief said “UK-based tech firms could actually end up paying more tax than their international competitors’ with Just Eat, Rightmove, MoneySuperMarket and Match.com named as possible victims if their sales continue to grow.”
However, it seems that once again Facebook have tricked the system. The UK Tax system will need tighter controls to ensure that companies such as Starbucks, Amazon and Facebook do not get away with this.