How Mark Zuckerberg’s Facebook Pays Less Tax than You?

facebook tax less uk
facebook tax less uk

facebook-tax-less-uk--Short Bytes: If you are living in the UK, you are paying more tax than Facebook. Don’t be angry, it’s nobody’s fault. Read more to know how it’s possible. 

Just when you finished calculating your yearly taxes and cursed your government enough, this happens. In the UK, Facebook has paid just £4,327 for the year 2014 as the corporation tax and generated £105 million ($161 million) in sales.

This is lesser than an average UK worker who paid about £5,393 and earned just  £26,500.

So, how did this happen? Did Facebook do something illegal to save the taxes?

Well, you’ll be disappointed to know that the answer is NO and they didn’t make just the right kind of taxable profit.

Still confused? Let’s get into the details (I’ll be thanking BBC for that)

The corporation tax, we are talking here, is only paid by companies- not individuals. According to the UK laws, the firms making more than £300,000 a year need to pay 21% tax on the profits they make.

In the UK alone, Facebook has made about £105 million ($161 million) in sales.

But, then comes the part where we talk about the technical aspects and loopholes. All the money that a company makes, isn’t a taxable profit, especially when the company spends a great portion of the earnings.

Out of the total £105 million, Facebook spent more than £35 million on its UK-based staff and gave them share-based bonuses. So, as the BBC describes, before paying the taxes, Facebook made a “pre tax” loss of £28.5 million.

Also read: 

Thanks to all these technicalities, Facebook manages to pay less tax that you.

Even though everything is legal and well documented, Facebook is attracting some controversies. It’s being claimed that the social networking company is draining out its profits from the a country with the one of the lowest tax rates.

Yes, I’m talking about the Republic of Ireland, where tax rates are about half that of the UK.

In a statement to BBC, a Facebook spokesperson says: “I’m not saying no comment, but there is no further comment to the statement. We are compliant with UK tax law and in fact all countries where we have employees and offices. We continue to grow our business activities in the UK.”

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