Facebook Faces Tax Controversy in UK

facebook_logo_flatRecent company filings from Facebook reveal that the site exported €645 million (about $883 million in U.S. dollars) in United Kingdom earnings to the Cayman Islands, according to The Guardian. The Cayman Islands have much looser tax laws than the United States and Europe, leading many to speculate that Facebook made the move to dodge paying taxes in Ireland, the site’s European home base.

Facebook’s account filings this week showed that they earned nearly €1.5 billion internationally this year, though they paid only €4.4 million in taxes to the Irish government. Using a complicated series of subsidiaries and tax structures, Facebook has effectively sheltered itself from a heavy tax burden. Many critics in the U.K. have accused the site of hurting the local Irish economy, though Facebook responded by saying that they provide a good source of technical jobs.

“Facebook complies with all relevant corporate regulations including those related to filing company reports and taxation,” Facebook said in a statement. “We have our international headquarters in Ireland that employs almost 400 people and a series of smaller local offices providing support services all over Europe. Dublin was selected as the best location to hire staff with the right skills to run a multilingual hi-tech operation serving the whole of Europe.”

European political leaders have urged Ireland to close its tax loopholes and prevent Facebook from dodging its payments in the U.K. Even though Facebook often vows to make itself more transparent to users, the site isn’t above a little smoke-and-mirror strategy to protect its financial bottom line.