Facebook's UK tax bill has tripled to £15.8m following rising profits and an overhaul of the social network firm's tax structure, but the company will still receive a substantial cut to its bill thanks to a tax credit.
Thanks to awarding shares to its employees, the social media giant is receiving £8.4m in tax relief, cutting its final amount owed down to £7.4m. In 2016, Facebook's UK tax bill rose to £5.1m following a major restructure of how the firm paid tax. The company's UK offices primarily provide marketing services, sales and engineering support for the firm.
For this year's tax figures, the company reported that profits had only grown by £4m year-on-year, up to £62.7m from £58.4m in 2017. Meanwhile, revenues rose by a third year-on-year to £1.2bn in 2017, largely thanks to increased revenues from inter-company and advertising reseller services.
"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 Steve Hatch, vice president for Northern Europe at Facebook.
Facebook and other tech giants have received significant criticism over how much tax they typically pay in Europe, with particular attention paid to revnues that are moved through other countries with lower corporate tax rates. Last week, Chancellor Philip Hammond raised the idea of introducing a new tax that would address this concern.
According to Facebook, the UK is its largest engineering base outside the USA. Over the past year, Facebook has increased its UK headcount by 34 per cent to around 1,200, and it has plans to double its office space in King's Cross, London, adding the capacity for more than 6,000 workstations by 2022.