Facebook agrees to stop tax-avoidance scheme in Britain

Facebook will soon see its tax bill in Britain go way up.

The social networking company on Friday told Bloomberg that it has agreed to stop doing an end run around Her Majesty’s Revenue & Customs office. Facebook said it will no longer route advertising sales made to its largest clients in the United Kingdom through Ireland, a notorious tax haven. Instead, the Menlo Park company will recognize the revenue as having been earned in the U.K. itself.

The agreement will not affect sales made to smaller U.K. companies where the ad space is purchased online, according to Bloomberg. Despite that, the deal should mean that Facebook will pay millions of pounds more in taxes than it did before.

“The government is committed to making sure multinationals pay their fair share of tax,” the British Treasury said in a statement.

The agreement will take affect in April and Facebook’s new tax bill will come due next year.

The social networking giant has been under fire for its tax practices since earlier this year when a report in the Sunday Times revealed that the company had paid 4,327 pounds — a little more than $6,000 — in corporate taxes in the United Kingdom in 2014, despite recording more than $1 billion in sales there. The Revenue & Customs office had been examining Facebook’s tax practices there from between 2010 and 2014.

It was unclear from the reports in Bloomberg and the BBC whether Facebook will pay back taxes on its past earnings.

Faceboook is one of a handful of multinational corporations whose tax schemes have drawn scrutiny in the United States and Europe. Italy and France have both charged that Google owes them back taxes. The search behemoth already reached an agreement to pay back taxes in the United Kingdom, although that deal is being investigated by European authorities.

Meanwhile, Apple is the subject of an ongoing investigation in Europe over its tax practices and may owe $8 billion in back taxes there. The company already agreed to pay taxes on past earnings in Italy.

Photo: A logo created from pictures of Facebook users is on display at the company’s data center in Sweden. (Jonathan Nackstrand/AFP/Getty Images)


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  • hoapres

    Facebook needs to pay more in taxes in Silicon Valley for all the damage it has done.