Facebook 'paid just £2.9m in tax on profits of £800m' made outside US: Report

Now, Facebook has come under fire for its tax affairs in the UK after it emerged that the social networking giant paid just 2.9 million pounds in tax on profits of over 800 million pounds.

Filings for Facebook Ireland, through which all of the social network's profits outside the US are channelled, show it paid the Irish tax authority 2.9 million pounds last year.

Facebook is structured so that companies buying advertisements on the website in the UK, or anywhere outside of the US, have to pay Facebook Ireland.

This allowed Facebook Ireland to make gross 2011 profits of 840 million pounds, or 3.1 million pounds per each of its 287 staff, the Guardian reports.

Despite the high gross profit, Facebook Ireland was able to cut its tax bill to just 3.2 million Euros by using an accounting technique called the 'Double Irish', the paper added.

According to the paper, the technique allows multinationals to move large amounts of money to other subsidiaries in the form of royalty payments.

Facebook moved nearly 750 million pounds to the Cayman Islands and its Californian parent in licensing and royalty payments.

After the transfers, Facebook Ireland reported a 15 million pounds annual loss, despite it accounting for 44 percent of the social network's 1.95 billion pounds revenues, the paper added.