Companies coughing up taxes?
By Jim Scott
Most Britons are subject to taxes. Whether that’s in the form of council tax and deductible taxes from wages every month. Individuals have to pay taxes to government in line with the amount they earn, and companies are no exception.
But not every corporation has been quick to pay the taxes they owe. Only on Monday, Apple finally paid a £14 billion tax bill after years disputing it, and later that day it was announced that Facebook UK’s tax bill had tripled to almost £16 million. But as companies change their position on the money they owe. Are they actually coughing up their taxes?
On Monday October 8th, it was confirmed that Facebook in the UK had cleared its £15 million bill, up £10 million from what it owed in 2016. The London Evening Standard reports Facebook received £1.2 billion in revenue from the UK alone over the past year, whilst politicians were reportedly concerned that the tax bill could "chase the social media giants away". BBC News however, reported the social media platform only paid £7.4 million of the bill because it received a tax credit. The relief was handed to the corporation as it had "awarded shares to its employees", something which reduces the amount of tax its liable to pay.
Making it clear that Facebook’s would pay the correct amount of tax. Vice-president for Facebook UK, Steve Hatch 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.”
Corporation tax is levied on all companies across the UK. It is calculated on a company’s profit rather than revenue. This is why Facebook, despite earning over £1 billion last year, only had to pay a comparatively small portion of tax. Corporation tax is classed as a direct tax meaning it goes straight into central government, the amount raised can often help shrink national debt.
In the UK small business are less likely to get away without paying their taxes. It is harder to audit large companies and corporations, Small Business explains. This is one of the reasons which have been reported to be behind some corporation's reluctance to pay. The Government usually regards a small business to be an operation with less than 50 employees and an annual turnover of less than £10 million.
Meanwhile, significantly earning more. Apple, which reached its $1 trillion-mark in August, has owed Ireland more than $16 billion (£14.3 million) in unpaid taxes to Ireland from 2016. The tech firm, which has just released its latest iPhone series, was ordered to pay the bill by the European Commission because it had ‘benefitted’ from illegal state aid from Ireland two-years-ago, Fortune explains.
But whilst Apple has been reluctant to pay and said it will appeal the decision, Apple finally paid its multi-billion-dollar bill. The amount that Apple owed to Ireland was more than the £11 billion which was owed to the UK from Google, Facebook, Starbucks and Amazon, The Telegraph reported in 2012.
HMRC will have its work cut out over the next few days. PayPal has agreed to pay an additional £2.7 million in corporation tax following ‘scrutiny’ from review on how the company pays its taxes.