Facebook's latest financial results for the UK show that the firm paid only £4,327 in corporation tax for 2014, yet gave its 362 UK-based staff a total of £35.4m in share bonuses.
This is despite a recent Companies House filing indicating that Facebook's UK arm made a whopping pre-tax loss of nearly £28.5m last year.
The amount awarded in share bonuses was nearly as much as the £40.8m paid to its employees in 2014. The bonuses equate to an average £96,685 per Facebook UK employee.
Facebook operates at a loss in the UK, despite generating significant profits of £462m by the end of its 2014 financial year worldwide, meaning that it pays proportionately very little in tax.
People on the average UK salary of £26,500 pay over £5,000 a year in tax and National Insurance contributions, meaning that the biggest social network on the planet is paying less tax in Britain than the regular UK worker.
Facebook UK's small tax bill is a result of paying corporation tax based only on its losses, which were further compounded by carrying over £5.6m of losses from the previous year.
Of course, paying out tens of millions in non-tax deductible bonuses that directly affect its overall balance sheet has contributed to the net loss that in turn results in a tiny corporate tax bill.
Facebook UK primarily provides sales, marketing and software engineering support for Facebook Ireland, which generates the revenue from selling advertising in the UK and other nations.
Facebook as a whole is profitable, but its official UK limited company arm is not, and current British tax regulations mean that the company can get away with paying very little tax.
A Facebook spokesperson told V3 that the firm takes its tax obligations very seriously: "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."
Tax evasion is illegal, but tax avoidance techniques like this are not. Facebook is therefore out of the reach of the law, although not perhaps from the wrath of the UK public, as was demonstrated with minor irony on Twitter.
A disgrace. Daylight robbery : Facebook pays £4,327 in UK corporation tax http://t.co/kGoOSBVzEB— David Lammy (@DavidLammy) October 11, 2015
I have spent way more on facebook ads in the last year than facebook UK paid in corporation tax. Just sayin...— cliffski (@cliffski) October 11, 2015
Facebook is facing the disdain of some UK citizens, but is likely to win back favour after chief executive Mark Zuckerberg's recent speech at the UN pledging to bring internet access for refugees.
Author's view: Facebook UK's tax practices echo those of Amazon and Starbucks, which were recently revealed to have bypassed tax payments through various avoidance techniques.
Such companies may not be breaking any laws, but at a time of lingering post-recession austerity, tax avoidance by companies that are profitable as a whole can be galling for the average worker who pays more in individual tax than nation-specific arms of global firms.
The public relations impact of such avoidance will not win Facebook any favours with its UK user-base, but it does not appear from the company's statement that it will take much action concerning the tax bill.
As such, calls will no doubt be directed on the government to crack down on such schemes, regardless of the potential argument that employees with hefty bonuses pay more into the UK's tax system.
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