Facebook to pay more UK tax after overhaul

Facebook to pay more UK tax after overhaul

The social media giant Facebook will pay millions more to the UK government after an overhaul of its current tax system.

The US company has come under heavy criticism after reports last year, citing documents filed to the UK registrar of companies, showed it paid a total of £4,327 (S$8,466) in corporation tax in the UK in 2014.

However, on Monday it will start notifying large UK customers that they will receive invoices from Facebook UK and not Facebook Ireland. Thus, Facebook will no longer funnel larger advertising sales through its Irish subsidiary which had allowed it to avoid higher taxes in the UK

"UK sales made directly by our UK team will be booked in the UK, not Ireland. Facebook UK will then record the revenue from these sales," Facebook confirmed in a statement to CNBC.

"In light of changes to tax law in the UK, we felt this change would provide transparency to Facebook's operations in the UK The new structure is easier to understand and clearly recognises the value our UK organisation adds to our sales through our highly skilled and growing UK sales team."

Facebook will account for more revenue in the UK and pay a higher level of corporation tax on the profits it makes in the country. The news was first reported by the BBC but it's as yet unclear precisely how much tax it will now pay.

The new arrangement will begin in April this year but will be not backdated.

-Additional reporting by CNBC's Arjun Kharpal.

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