Facebook is handing out $1 million bonuses to offset taxes

Facebook announced it will be awarding its U.K. employees with huge bonuses to offset the taxes it is required to pay the U.K. Treasury, as reported by CNBC today. 

How big are we talking? As much as £775,000, or $1.1 million to each employee — which is a total of £280 million, or $396 million in U.S. dollars. The bonuses will be paid between now and the end of 2018. 

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The news comes on the heels of an announcement that Facebook would be changing its tax structure so that revenue generated from the company’s largest advertisers will be sent through the UK versus Ireland, where the corporate tax is lower. This new change was put into effect in order to combat criticisms of tax sheltering.

The reason behind the bonuses

Facebook said the change was an effort to provide greater clarity to its tax structure. The company was expected to be paying a higher corporate tax bill as a result — as much as 20%. 

‘In light of changes to tax law in the UK, we felt this change would provide transparency to Facebook’s operations in the UK. The new structure is easier to understand and clearly recognizes the value our UK organization adds to our sales through our highly skilled and growing UK sales team,” said Facebook in a statement.

However, Facebook’s move to pay monumental bonuses to employees is likely going to be frustrating for the U.K. government, since new data revealed that the U.K. Treasury pays more to Facebook for advertising placement than it receives in taxes. Facebook also paid large bonuses in 2014, recording a loss of  £28.5m and owing just £4,327 in corporation tax

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