Facebook accused of tax avoidance on UK income

Facebook's founder Mark Zuckerberg maintains that his website is not motivated primarily by money (Getty Images)

Facebook was accused last night of "immoral" tax avoidance after a new analysis of the company's UK business suggested that the social networking giant paid just £238,000 in corporation tax in Britain last year.

Although industry experts estimate the company made £175m in revenue from its UK businesses last year, Facebook is able to avoid paying millions in corporation tax by diverting most of its sales via Ireland.

Annual accounts published yesterday showed Facebook UK Limited declared turnover of £20.4m using the legal scheme. Yet Enders Analysis, an independent research firm, estimated Facebook's likely UK sales at £175m last year as the world's biggest social networking website has continued to attract advertisers.

Facebook is just one of a number of online giants that divert much of their UK profits through offices in Ireland or parts of Europe with lower corporation taxes. One analysis suggests the five largest online companies – Apple, Amazon, Google, eBay and Facebook – managed to save up to £650m in tax through such schemes.

Amazon is the UK's most popular retail website, with more visitors than Argos, Next and Tesco. Last year it made £3.2 billion in UK profits and accounted for one in four of all books sold in Britain. But by registering its European headquarters in Luxemburg it has managed to avoid paying vast sums to the Treasury.

Google paid just £8m in corporation tax on £6.3bn of UK sales between 2004 and 2009.

Facebook declined to comment on estimates that it generated £175m in the UK and defended its decision to locate its non-US headquarters in Dublin. A spokeswoman said: "As is normal for an organisation operating in dozens of countries around the world, we regularly file reports about local operations. The information does not necessarily present a full account of overall global financial performance so it would be a mistake to draw any conclusions from these filings."

Labour MP John Mann, who sits on the Treasury Committee, criticised the willingness of web-based companies to avoid paying UK tax, calling the arrangements "disingenuous and immoral".