According to filings of Facebook’s Irish subsidiary, the social network paid just £2.9 million of corporate tax on more than £800 million in international profit in 2011. Facebook routes most of its overseas revenue—about 40 percent of annual total—through Ireland, its international headquarters. It then shifts the money to another subsidiary in the Cayman Islands, allowing the company to avoid tax payments to the United Kingdom.

British businesses that advertise on Facebook must purchase ads through Facebook Ireland Ltd, allowing the company to bypass HM Revenue and Customs, as well as authorities in other higher tax districts. In 2011, less than £240,000 was paid in UK taxes. But the Dublin office reported gross profit of £840 million. Somehow, Facebook Ireland still posted a £15 million loss after hundreds of millions were routed to the Cayman Islands and to Facebook headquarters in the US. Similar tactics have been executed by American companies such as Google and Starbucks.

After UK Lawmakers accused it of immorally avoiding tax Dec. 3, Starbucks announced Dec. 6 it would voluntarily pay £20 million in UK corporation tax over the next two years.

“Having listened to customers and to the British public, Starbucks in the UK will be making changes which will result in the company paying higher corporation tax in the UK—above what is currently required by law,” Starbucks said in a statement.

Public outcry ensued after British Parliament’s public accounts committee stated the government needed to “get a grip” on multinational companies that exploited tax laws and moved profits generated in the UK offshore.

“Global companies with huge operations in the UK, generating significant amounts of income, are getting away with paying little or no tax here,” Labor Party legislator Margaret Hodge, committee chair,” said. “This is outrageous and an insult to British businesses and individuals who pay their fair share.”

Starbucks was one of the companies singled out by British lawmakers, along with Google and Amazon. Because companies operating in Europe can choose any of the 27 European Union nations to base themselves, they often choose to take advantage of a particular nation with lower tax rates. Starbucks bases its European business in The Netherlands and only pays British tax after first transferring large sums of profit to its Dutch headquarters. UK chief secretary to the treasury Danny Alexander told the BBC paying tax is an obligation, not “a voluntary choice,” and the government will continue its efforts to tacks tax avoidance.

“Taxation for big companies, or for anyone in society, can’t be, and mustn’t be, a voluntary arrangement,” Alexander said. “Thinking of the tax system as if it is like the church plate going around on a Sunday morning is completely the wrong way to think about it.“

“Paying tax is not a voluntary choice,” he added. “It is not something you can just choose to do willy nilly because you think it will please your customers, it is an obligation.”

Likewise, Google has been able to cut its tax bill by more than $3 billion by moving profits between headquarters in Ireland and the Netherlands to Bermuda. Bloomberg reports Google’s “income shifting—involving strategies know to lawyers as the Double Irish; and the Dutch Sandwich—helped reduce its overseas tax rate to 2.5 percent, the lowest of the top five US technology companies by market capitalization, according to regulatory filings in six countries.”

London mayor Boris Johnson, however, defended the companies in an interview with Sky News.

“Imagine that you are the corporate finance director of one of these companies,” he said. “Your job is to look at the law as it stands. Your fiduciary duty to your shareholders is to minimize your tax exposure.”

Still, Labor Party MP John Mann chastised Facebook’s actions, calling them “disingenuous and immoral.“

“They benefit enormously from the country’s internet infrastructure but do nothing to fund it. It’s like driving a car with no tax. We would stand for it on our roads so why stand for it on the net?” he said.

Facebook, of course, defended its actions, stating it has complied with all regulations and acted within legal rules of taxation.

“Facebook complies with all relevant corporate regulations including those related to filing company reports and taxation,” a company spokesman said. “We have our international headquarters in Ireland that employs over four hundred people and a series of smaller local offices providing support services all over Europe. Dublin was selected as the best location to hire staff with the right skills to run a multi-lingual hi-tech operation serving the whole of Europe.”

[Image via Andrew Feinberg/Flickr]