Philip Hammond urged to introduce tech levy as MPs slam ‘outrageous’ Facebook tax bill

Posted On: 
9th October 2018

Philip Hammond has been urged by MPs to introduce a tech levy against Facebook after MPs slammed its “outrageous” tax bill.

The Chancellor has warned major tech firms that they could face stricter tax rules
PA Images

The Chancellor is under increasing pressure to change how large tech firms are taxed after it was revealed that Facebook’s corporation tax bill amounted to just £7.4m last year.

Mr Hammond has already warned tech firms that he could introduce a new digital services tax in the upcoming budget, saying in a speech at the Conservative party conference: “The time for talking is coming to an end. The stalling has to stop.”

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But MPs urged the Chancellor not to delay the move after new accounts showed the tech giant had knocked down their corporation tax bill by £8.4 million after receiving tax credits from employee share awards.

Conservative MP Damian Collins, chair of the digital, culture, media and sport select committee said: “Facebook should be paying a level of tax which more accurately reflects the value of their business in the UK.

“That’s why I’ve called for a levy on big tech companies like Facebook to fund online media literacy in schools.”

The tech giant posted a rise in revenue last year to £1.27bn, but the firm said it’s UK profits only amounted to £62.8m after “costs of sales” and “administrative expenses” had eaten up over £1.2bn.

But Labour’s Dame Margaret Hodge, who leads the all-party parliamentary group on responsible tax branded the bill as “absolutely outrageous”. She added: “It may be legal but it is not moral, especially when the company depends on so many public services funded by the taxpayer.”

Facebook defended the payments, saying that it was making significant investments in the UK, adding that the firm was looking to double its office space.

A spokesperson said: “We have also 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.”

The government refused to comment directly on the Facebook case, but a spokesperson warned: "While the UK has led the way internationally to ensure companies change their behaviour and pay the right amount of tax, the international tax system needs to be rebalanced and modernised to ensure it's fair for all businesses."

Meanwhile, Shadow Chancellor John McDonnell hit out at Mr Hammond, saying: “The Tories are letting large multinationals get away without paying their fair share of tac. Philip Hammond has let Facebook off the hook."