Facebook accused of "immoral tax avoidance"

Facebook is facing accusations of "disingenuous and immoral" tax avoidance following new analysis of its UK business that suggests the social networking giant paid only £238,000 in corporation tax in Britain last year.

Although according to estimates of industry experts,  the company made £175 million  in revenue from its UK businesses last year, Facebook was able  to avoid millions in corporation tax payment through diversion of most of its sales via Ireland.

According to annual accounts published yesterday at Companies House, Facebook UK Limited declared a turnover of £20.4 million using the entirely legal scheme. Yet according to Enders Analysis, an independent research firm, Facebook's likely UK sales were £175 million last year as the world's biggest social networking website had continued to attract advertisers.

Facebook is not alone in the game of diversion of much of UK profits through offices in Ireland or parts of Europe with lower corporation tax rates. An earlier analysis this year pointed to the five largest online companies – Apple, Amazon, Google, eBay and Facebook – having saved as much as £650  million in tax through such schemes.

Amazon, which was launched in the UK in 1998, has emerged as the UK's most popular retail website, attracting more visitors than Argos, Next and Tesco. However, by registering its European headquarters in Luxemburg it was able to avoid paying vast sums to the treasury. Despite its sales of one out of four of all books sold in Britain, it paid no UK corporation tax.

Internet giant Google paid just £6 million in corporation tax in 2011 on revenues of £395 million, according to its accounts at Companies House. However, that  was only a fraction of Google's actual UK turnover as filings from its own US parent company showed it generated $4.05 billion in Britain last year.