Saturday 20 January 2018

'We do not avoid tax' insists Facebook

Facebook has over 1.1 billion daily active users. Photo: Reuters
Facebook has over 1.1 billion daily active users. Photo: Reuters

Gordon Deegan

Facebook Ireland yesterday declared "we do not avoid tax" as revenues and pre-tax profits soared to record levels.

New accounts show that Facebook Ireland Ltd's corporate tax bill of €16.53m for 2015 represented only a tiny fraction of its record revenues of €7.89bn.

The 63pc - €3bn - increase in revenues to €7.89bn last year coincided with pre-tax profits at the firm increasing eight-fold, from €12.82m to €109.57m.

Facebook's Irish revenues represents more than half of the social media giant's global revenues of $17.93bn last year.

Facebook has over 1.1 billion daily active users and employs 1,500 people here. The sharp rise in profit saw the Irish firm's tax bill here increase more than three-fold, going from €3.4m to €16.53m.

The comparatively low profits enjoyed by Facebook Ireland reflect the firm's very large administrative expenses; including those paid out to other Facebook entities in royalty payments and fees.

The firm's administrative expenses for last year increased by €3bn to €7.7bn largely made up of royalties; service and management fees to Facebook Inc and the costs associated with the increase in headcount.

The total tax bill last year is based on an Irish corporation tax bill of €14m and a further €2m in a deferred tax charge.

A Facebook Ireland spokesperson said that the firm's €14m Irish corporation tax bill on its profits of €109.57m "represents an effective tax rate of 12.8pc, which is line with the standard Irish rate of 12.5pc".

"There are strict accounting and tax rules in Ireland that all companies have to comply with. We follow these rules and pay all the taxes that we are required to under Irish law," the spokesman said. "We do not avoid tax. We comply with all tax laws in the countries in which we operate."

The head of Facebook Ireland, Gareth Lambe said: "We are proud that in 2015 we have continued to grow our business and focus on our goal of connecting the world. The increase in our revenue is attributable to growth in advertising from the international business community that advertise on our platform."

"2016 has been an exciting year as we continue to invest in Ireland and concentrate on our advantages as a talent hub and centre of excellence. This year we announced the creation of 200 jobs, bringing the number of people to over 1,500 in Ireland. Staff costs last year increased from €62m to €77.5m," he added.

Facebook is rapidly becoming one of the country's biggest employers, but the huge gulf between its revenues and taxable profits in Ireland will refocus attention on the low taxes paid by the technology sector generally in Europe - including many with major operations in Ireland.

A report this week from UK-based charity Oxfam labelled Ireland a "tax haven" for what it said was facilitation by governments here of large-scale international profit-shifting, the low rate of corporate tax charged here, and the use of tax incentives for investors.

Irish Independent

Promoted Links

Business Newsletter

Read the leading stories from the world of Business.

Promoted Links

Also in Business