Friday, 5 July 2013

Twitter's tax

Much of the recent outcry over corporate tax avoidance erupted on the rapidly expanding social media site, Twitter, with tax campaigners, MPs and financial experts rushing to compose their 140 word tweets to stir up argument and debate over the tactics used by Google, Amazon and Starbucks.

So it is ironic that Twitter itself is remarkably coy about how much tax it pays and where.

Twitter submitted a brief set of UK accounts this week and by looking at them you can deduce that it declared profits of £92,000 in the UK in 2012, up from a mere £16,000 the year before.

Worldwide its advertising sales are expected to top $1bn or around £660m in 2014, mainly from charging advertisers to promote their tweets on the website.

There's not much more detail, because Twitter is a private company, though it gives an assurance that it pays all relevant taxes as set out by HM Revenue and Customs including corporation tax, VAT and all applicable payroll taxes.

What will tickle the interest of tax geeks is that San Francisco-based Twitter has located its European headquarters in Dublin, along with the majority of its international sales, finance and legal staff.

Google was condemned as "evil" by the chair of the House of Commons Public Accounts Committee, Margaret Hodge, for booking UK sales through Dublin, thus bypassing the need to pay UK corporation tax on the business.

Twitter declined to comment on whether it accounts for sales to UK customers in Ireland. It has 100 staff in Dublin and 60 in London.

Of course, it is important to point out that none of these companies is breaking the law in the way they structure their operations or declare profits for tax.

Google, for instance, has said it complies with all British tax rules and that it is up to politicians to change the law if they are unhappy with the outcome.

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