Social media site uses Ireland for lower taxation

Thu 11th of October 2012, filed under Internet News

Facebook tax evasion questions

Facebook are being asked stern questions about their tax activities, after the announced profits for 2011 were called into doubt. The social media website reported UK revenues of £20.4m, a huge contrast to the £175m that media analysts Enders estimate the firm made in Britain last year.

Richard Murphy, of Tax Research UK was extremely critical of the company, saying: "The UK is being taken for a ride. Facebook is taking standard practice for these IT companies to a new high, or low, depending on how you look at it. The UK is giving the tax break and the Irish get benefit of all the tax on the sales." Mr Murphy went on to say that it appeared only around 11 per cent of total sales were being declared in Britain.

The lower tax rates offered to companies in Ireland appears to be the main factor for the company basing their headquarters there. When questioned on this, Facebook told the Guardian: "We have our international headquarters in Ireland that employs hundreds, and a series of smaller local offices providing support services all over Europe. Dublin was selected as the best location to hire staff with the right skills to run a multilingual hi-tech operation serving the whole of Europe".

Controversy overshadows user milestone

Prior to this story breaking, Facebook had been in the news for positive reasons having recently reached one billion montly users. This had given shareholders hopes of a recovery, after continuing problems on the stock markets since they started to trade on the exchange in May this year. This will come as another blow to these stockholders, with the value of the company falling 2.90 per cent so far today.

Adrian Mursec, senior developer at theEword commented: "This is bad news for Facebook, who will have been desperate to avoid negative publicity on the back of the embarrassment over their share prices. Only time will tell how much of an impact this will have on the company as a whole, but they are sure to face scrutiny over their alleged tax evasion here."

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