Facebook accused of tax avoidance

FACEBOOK is facing allegations of tax avoidance after it paid just £238,000 in UK corporation tax on earnings of £175m.

The social network is able to avoid paying millions in tax by diverting a significant portion of its sales through Ireland, reports the Independent.

Accounts published at Companies House show Facebook UK declared turnover of £20.4m using a legal scheme. However, independent research firm Enders Analysis estimates its UK sales last year were approximately £175m.

Facebook is not alone in engaging in such tactics, with Apple reportedly saving $2.4bn (£1.5bn) worldwide in 2011 through legally diverting its revenues through low-tax jurisdictions. Online retailer Amazon was the subject of an investigation by HM Revenue & Customs after it allegedly paid no corporation tax on £7.6bn of UK revenues, which it achieved through basing the website in Luxembourg.

Labour MP and Treasury Committee member John Mann branded the practice “disingenuous and immoral”.

He said: “They benefit enormously from the country’s internet infrastructure but do nothing to fund it. It’s like driving a car with no tax. We wouldn’t stand for it on our roads so why stand for it on the net?”

He went on to suggest “traffic fee” be imposed on internet-based companies in order to prevent them from using and benefiting from UK infrastructure without paying back into the public purse.

“The British taxpayer is currently spending a fortune on upgrading the country’s broadband network, something that these businesses will benefit from enormously. It’s only right they should contribute,” he said.

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