LONDON (ShareCast) - (Sharecast News) - Facebook received a larger tax charge of £15.7m in UK tax last year, but the US tech giant more than halved its tax bill by paying shares to employees.
The final tax bill came to £7.4m, since Facebook will get tax relief of £8.4m after it gave out 1.48m shares to employees last year, which reduced its tax liability.

UK finance minister Philip Hammond last week said he would impose a "digital services tax" on overseas tech giants that, it is felt, do not pay an appropriate amount of tax in proportion to the true size and the importance of their businesses in the UK. The companies argue that they are doing nothing illegal.

According to accounts filed at Companies House, profits at Facebook's UK office - which provides marketing services as well as sales and engineering support to the company - increased £4m to £62.7m last year, while revenues rose by a third to £1.2bn.

In 2016, Facebook's UK office was charged £5.1m in tax as the company's revenues almost quadrupled to £842.4m and profits by almost £6m to £58.4m. After deductible expenses, the company only paid £2.6m.

The company received criticism for only paying £4.3m in tax in 2014 under an arrangement that treated UK revenues as a payment for services from Facebook Ireland.

Taxes are paid on profits, not revenues, though some companies slash the amount of tax they pay in the UK by moving money flows through other low-tax jurisdictions.

Steve Hatch, Facebook's Northern European vice president, said: "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."

Pressure has been mounting on tech firms in recent years over their international tax arrangements, as the way they structure their overseas offices allows them to pay minimal taxes despite being highly profitable.

At the Conservative Party conference earlier this month, Chancellor of the Exchequer Philip Hammond warned that if there was no imminent international agreement on how to tax the big internet companies, the UK would introduce its own digital services tax. "The time for talking is coming to an end and the stalling has to stop," he told delegates.

Facebook Inc is due to post third-quarter results in New York at the end of the month.

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