Facebook accused of refusing to listen to ‘voice of public opinion’

Title: Facebook accused of refusing to listen to ‘voice of public opinion’

http://www.theguardian.com/technology/2014/dec/05/facebook-profit-tax-treasury-crackdown-multinationals

Summary:

This article is about Facebook avoiding tax in the UK by channelling it through Ireland and they are using elaborate corporate structures and artificial devices for no purpose other than to avoid tax. Facebook, like Starbucks, which this week admitted it will pay no corporation tax in the UK for the next three years, is still refusing to listen to the voice of public opinion. The Treasury was unable to say whether the crackdown would prevent Facebook from being able to avoid UK tax in the future. Details of the “diverted profits tax” will be published in draft legislation on Wednesday.

Facts/Phrases:

Ø  On Friday as it emerged that the social network paid only €2.3m (£1.8m) of tax on almost €3bn (£2.37bn) of advert sales channelled through Ireland in order to avoid tax in the UK and other countries.

Ø  Facebook channelled €2.98bn, or 46%, of its annual global sales through Ireland – making a gross profit of €2.92bn. It was able to cut its tax bill massively by paying out €2.915bn in “administrative expenses” mostly in royalty payments to Facebook’s parent company.

Ø  The manoeuvre reduced Facebook Ireland’s taxable profit to €7.3m, on which it paid €2.3m of tax, according to accounts filed at Ireland’s Companies Registration Office. Facebook declined to comment.

Ø  Facebook has been able to avoid paying any tax in the UK for the past two years despite Britain being one of its biggest markets, with 33 million people signing in at least once a month. Facebook’s UK accounts show the company made a loss of £11.6m last year.

Ø  The boss of Starbucks UK, which was revealed to have paid only £8.6m of tax on £3bn of UK sales since opening in Britain in 1998, would not start paying corporation tax for three years exchequer following a public outcry. Google, which also channels profits via Ireland, paid £20m tax in the UK last year, while its actual British revenues were £5.6bn.

Ø  He said the levy, dubbed the “Google tax”, which will impose a 25% tax on UK profits artificially shifted abroad, would raise more than £1bn over the next five years.

Ø  The “Google tax” rate is 5% higher than next year’s UK corporation tax rate of 20%, suggesting the chancellor hopes companies will choose to dismantle complex structures that divert profits to low-tax nations such as Luxembourg and Ireland, and choose to pay HM Revenue and Customs instead.

Opinion:

In my opinion, this article shows how major social media institutions have become so complex and big that they have started to avoid paying tax. Facebook being well known it shows how once a major institution has changed and become global.