If you’re online, you may be one of more than 1.39 billion people whose first website to check is Facebook. You may have the app downloaded on your phone or tablet, or you might have your phone set to notify you with any “likes”, comments, or messages. With so many Facebook users, it’s easy to understand why the social media giant made over $2.9 billion in 2014. It’s more difficult to understand why they only paid a little under $7,000 for their UK corporation tax bill.
Facebook is under scrutiny due to its “tax arrangements” with the European Union member states. While the European Commission investigates on Facebook, the social media platform has company: Other corporations under fire include Google, Amazon, and Starbucks. They also paid in extremely low tax amounts, especially when compared to their gross income.
How are these corporations getting away with what seems a paltry amount of tax payments? It is fairly simple: they are going by the UK tax laws. According to several tax law rulings in the country of Luxembourg, for example, corporations are allowed to spread profits throughout their stores, therefore lowering their tax payments.
While many stand by Facebook and the other companies being investigated, others say that these corporations ought to realize that they have the responsibility to pay their taxes more fairly than they seem to be doing.
Until an actual decision is made, just remember: Facebook paid less in taxes than most individual UK employees.