Facebook Inc has become the latest multinational to come under the spotlight for its tax affairs after figures revealed it paid just £2.9 million (US$4.69 million) in tax on profits of more than £800 million.
Filings for Facebook Ireland, through which all of the social network’s profits outside the US are channeled, show it paid the Irish tax authority 3.2 million euros (US$4.2 million) last year.
Facebook is structured so that companies buying advertisements on the Web site in the UK, or anywhere outside of the US, have to pay Facebook Ireland.
This allowed Facebook Ireland to make a gross profit of £840 million last year — or £3.1 million per each of its 287 staff. Despite the high gross profit, Facebook Ireland was able to cut its tax bill to 3.2 million euros using an accounting technique called the “Double Irish.”
The maneuver allows multinationals to move large amounts of money to other subsidiaries in the form of royalty payments. Facebook moved nearly £750 million to the Cayman Islands and its Californian parent in licensing and royalty payments.
After the transfers, Facebook Ireland reported a £15 million annual loss, despite it accounting for 44 percent of the social network’s US$3.15 billion revenues.
Like Apple Inc and Google Inc, Facebook uses its Irish subsidiary to reduce its liabilities to the UK’s HM Revenue & Customs (HMRC) and other European tax regimes. Amazon.com Inc and Starbucks Corp also cut their British tax bills by using the same technique via other European countries.
Last year Facebook paid just £238,000 in UK corporation tax — less than the average pay and bonus of its UK-based staff. It is estimated UK revenues amounted to £175 million last year.
The revelations are likely to reignite anger at giant US companies paying little tax in the UK despite making hundreds of millions of pounds in the country.
Starbucks had been facing calls for a mass boycott after it emerged it has paid no corporation tax in Britain for the last three years, and just £8.6 million since 1998. It has promised to pay about £10 million to the exchequer a year for the next two years.
A Facebook spokeswoman said: “Facebook complies with all relevant corporate regulations including those related to filing company reports and taxation.”
The company added that it chose to base its international headquarters in Ireland as it was the “best location to hire staff with the right skills to run a multilingual high-tech operation serving the whole of Europe.”
British Chancellor of the Exchequer George Osborne promised to tackle “unacceptable” tax avoidance in his autumn statement this month. He said more resources were being put into ensuring multinational companies “pay their proper share of taxes.”
He also confirmed a £154 million blitz on tax avoidance and evasion, with HMRC hiring an extra 2,500 tax inspectors to target high earners who aggressively exploit loopholes to avoid or evade tax.
Margaret Hodge, the chair of the Public Accounts Committee, said multinationals had been allowed to get away with “ripping off” taxpayers because of a weak tax authority, poor legislation and a lack of international cooperation.
“Global corporations with huge operations in the UK generating significant amounts of income are getting away with paying little or no corporation tax here. This is an insult to British business and individuals who pay their fair share,” Hodge said.
“The inescapable conclusion is that multinationals are using structures and exploiting current tax legislation to move offshore profits that are clearly generated from economic activity in the UK,” she said.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day