Facebook Inc.s (FB) British tax bill rose by more than 20% last year, details of the company's accounts revealed Wednesday, but its swing into profit threatens to ignite the debate over how to effectively charge U.S. tech firms doing business in Europe.
Facebook UK generated revenue of £842 million ($1.17 billion) in the 2016 fiscal year, the company revealed in accounts filed with British authorities, a 75% increase from 2015. Its operating profit of £58.4 million rose from a loss of £52.5 million in 2015 - a figure that controversially led to Facebook UK earning £11.3 million in government tax credits, despite that fact the its Menlo Park, Calif.-based parent generating a global profit of $6.2 billion for the same fiscal year.
However, Facebook's UK tax bill was pegged at £5.1 million, the accounts indicate, which equates to a corporate rate of 8.7%, well shy of the 20% rate typically paid by British companies. Facebook UK cited £21.8 million in "additional expenses deductible for tax purposes" in its public accounts.
The bill also comes amid speculation that the European Commission is likely to demand that millions in back taxes be paid by Amazon Inc. (AMZN) to Luxembourg later Wednesday after the world's biggest online retailer was linked to the so-called "LuxLeaks" investigation that revealed preferential treatment for several U.S. multi-nationals from the tiny European Duchy.
The EU estimated a back taxes bill of 400 million euros for Amazon a year ago, but a revised figure is expected following conversations with other regulating bodies. McDonalds Corp. (MCD) and Engie SA (ENGIY) are next to face scrutiny over the same Luxembourg tax issue. At least 35 companies including Amazon and Anheuser-Busch Inbev (BUD) will pay back taxes to Belgium because of their participation in the illegal tax scheme.
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