Facebook’s UK tax bill has tripled to £15.8m while PayPal has agreed to pay an extra £2.7m to HMRC after coming under scrutiny.
Despite the increase in Facebook’s bill, it will only have to pay £7.4m because of a tax credit it received after awarding shares to its employees.
Facebook reported profits of £62.7m on sales of £1.27bn in 2017, making its net corporation tax bill less than 1 per cent of revenues.
PayPal’s UK subsidiary increased the tax it paid to €4.7m (£4.1m) in 2017, up from €181,000 the year before. The company said that the increase was a result of a review by HMRC.
“This review is now complete. As a consequence, the company has agreed and settled its outstanding liabilities and as a result is not subject to any current enquiries,” the company said.
PayPal’s revenue rose 8 per cent to €36.7m in 2017 while pre-tax profits increased to €7.8m from €1.2m. Its UK subsidiary doesn’t record income from UK transactions which are reported elsewhere.
Facebook’s UK office provides marketing services and sales and engineering support to other parts of the company.
“We have changed the way we report tax so that revenue from customers supported by our UK teams is recorded in the UK and any taxable profit is subject to UK corporation tax,” said Facebook’s northern Europe vice-president, Steve Hatch.
It comes as the Treasury plans a new tax on advertising revenues for tech firms such as Facebook, Google, Twitter and Amazon to prevent them from avoiding UK tax by declaring income in other countries.
Chancellor Phillip Hammond announced plans for the new digital services tax in last November’s Budget.
“Multinational digital businesses pay billions of pounds in royalties to low-tax jurisdictions where they are not taxed,” Mr Hammond said.
He recognised that he is unable to tackle the “tax challenge posed by digital economy” on his own and said that international co-operation was needed, though he assured the nation that the UK is “leading the charge” on that front.
