Complete and total bollocks of course

How One Direction pay 1900 times more tax than Facebook: Band paid £8.2m to HMRC last year – while social networking site paid just £4,327
One Direction paid almost 2,000 times more tax than Facebook last year
The band paid £8.2million in tax compared to £4,327 by social media giant
In 2014 One Direction became the world’s second biggest-selling act
Each member, including Zayn Malik, have a personal wealth of £20million

Depending upon which part of the accounts you look at Facebook paid $2 billion or $200 million in corporate income tax last year. I’m much too bored of this nonsense to bother working out whether we should look at the provision or the cashflow statement. But it’s rather more than One Direction paid either way.

Because corporate income taxes are, by design, paid where the company is domiciled, under the rules of that domicile, and that’s all there is to it.

10 thoughts on “Complete and total bollocks of course”

  1. “Because corporate income taxes are, by design, paid where the company is domiciled, under the rules of that domicile, and that’s all there is to it.”

    Well not quite. A company generally pays tax in each country where it is in engaged in a business through a permanent establishment (to the extent of the profits of the business it does in that country), so a, say, US incorporated/ headquartered/ domiciled company can be liable tax on the profits of its French, German, UK and Italian branches in those countries if it does business in those countries *through a permanent establishment*.

    But if it doesn’t, that’s OK.

  2. If One Direction paid that much tax they need a new accountant, if I were them I’d aske Amazon who they use.

  3. Presumably they should do all their recordings in a studio on the Isle of Man, and spend fewer than 90 days touring on the mainland. The rest of the year they can spend in exotic locations shooting videos.

    Easy, this tax-avoiding lark!

  4. @Andrew M

    You should acquaint yourself with the new statutory residency tests. There’s more to breaking UK tax residence these days.

  5. I think Tim’s getting this one wrong. There’s a parent company in California which is of no relevance to the business Facebook does in Europe, other than being its shareholder.

    The relevant company to Facebook’s business in the UK (and the rest of the EU) is domiciled in Ireland, so in theory pays Irish tax. This is completely legal under the EU “single place of business” rules. In practice, it doesn’t pay Irish tax, which is why it’s domiciled in Ireland.

    (the tax that Facebook pays in the US, as for most large US companies with cash to spare, is solely on the business that it does in the US, with overseas earnings held offshore in the hope there’ll be an amnesty at some point).

  6. @ johnb78
    i) if you’re trying to imitate me, be pendantic
    ii) The quote doesn’t say “Facebook UK” it says “How One Direction pay 1900 times more tax than Facebook”
    iii) No your para iii is wromg. US Corporations pay tax on US profits plus profits remitted to the US, so profits earned in Ireland and remitted to USA in order to pay dividends pay dditional tax on the excess of US tax rates over Irish tax rates.
    iv) see i)

  7. “Because corporate income taxes are, by design, paid where the company is domiciled, under the rules of that domicile, and that’s all there is to it.”

    And if you change that approach, to have to pay different taxes differently everywhere a company does business, you’ll make it impossible for small companies to do business globally, which is a bit stupid given that’s so much easier now, especially with software companies.

  8. The article’s in a British newspaper, so assuming a UK context is reasonable.

    And my para iii is correct. Most growing, cash-generating US companies (including Apple, Facebook and Amazon) don’t remit overseas profits to the US, precisely because they would have to pay US tax on them if they did.

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