Facebook paid no corporation tax in Britain last year, according to its latest accounts, despite taking an estimated £223m share of the digital advertising market.
The social network's tax bill fell from £238,000 in 2011 to zero, while its reported UK income rose by 70%.
Together with Google, Facebook accounts for almost half of the £6bn expected to be spent on digital advertising in the UK this year, according to forecaster eMarketer.
Google will take the lion's share, with a 43% slice, but Facebook's influence is increasing. Its share is projected to grow to 5% of spend, or £303m, in 2013.
In the last two years, its estimated British revenues have risen from £181m in 2011 to £223m in 2012, according to eMarketer.
However, those numbers are not reflected in its accounts. In common with fellow American technology leaders Google and Apple, Facebook funnels the vast majority of its income from advertisers targeting its 33 million British users through Ireland. "This is yet another example of what appears to be deliberate manipulation of accounts of economic activity to deprive the British taxpayer of a rightful tax contribution, according to the profits they make in the UK," said Commons public accounts committee chairwoman Margaret Hodge. "I am getting fed up of this constant stream of stories and little sign of a challenge from HMRC and a strange silence from government."
Accounts filed at Companies House show that in 2012 just £35m of Facebook's UK income was booked in the market where it was generated. This was a 70% increase on 2011, when revenues were reported at £20m.
France is pushing for Europe to adopt a new corporation tax regime which would see multinationals such as Google and Facebook regulated and taxed in the countries where customers use their websites.
Fleur Pellerin, the French digital economy minister, is expected to push for the reforms at a summit of European leaders scheduled for the end of October, which the EU digital commissioner, Neelie Kroes, is also expected to attend.
Legislation would be changed to ensure companies are taxed according to where revenues are generated, rather than the geographic location of subsidiaries used to collect the revenues.
"What we have in mind is to find the criteria to define the taxable basis that we can attach to European territory," she told the Financial Times. "When we talk to Google or Facebook or the others … of course they are not happy about paying more corporate tax. But they are happy to agree to play by the rules. The thing that bothers them is uncertainty."
A Facebook spokesman said: "Facebook pays all taxes required by UK law and we comply with tax laws in all countries where we operate and have employees and offices. We take our tax obligations seriously, and work closely with national tax authorities around the world to ensure compliance with local law."
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