Facebook said its main UK subsidiary generated an 11-million-pound tax credit in 2015 even as revenues soared, thanks to its tax efficient structure, accounts published on the weekend showed.
Analysts say Facebook generates hundreds of millions of dollars in revenue from UK clients each year but until this year all transactions were booked in Ireland, minimizing the social media group's UK tax bill.
Facebook UK Ltd is funded by affiliates such as the main Irish unit. It received over 210 million pounds ($261.14 million) in 2015 from these affiliates. But that wasn't enough to cover its costs and the UK subsidiary reported a loss of 52 million pounds.
A spokeswoman said Facebook paid all the taxes it was required to under UK law.
"We are proud that in 2015 we have continued to grow our business in the UK and created over 300 new high skilled jobs," she added.
UK politicians, spurred by public anger about corporate tax avoidance, have criticized the tax arrangements of Facebook and other U.S. tech giants in recent years. The companies exploit loopholes in U.S. and international tax rules to pay almost no tax on non-U.S. profits.
Last year, the UK government introduced a new tax to target structures like Facebook's. In March, Facebook said it would begin to report some UK revenues in Britain from 2016, although it's unclear what impact, if any, this change will have on its tax bill.
Facebook's UK loss was swelled by charges for share incentive schemes, which have not yet vested.
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Facebook won't get the benefit of the tax deduction until this happens, which means the company may still have to pay tax for 2015. Excluding the deduction for share schemes, Facebook would have a tax bill of 4 million pounds for last year.
However, the spokeswoman declined to say if Facebook had paid any tax in respect of 2015.
Facebook reported worldwide net income of $3.7 billion last year, on turnover of $17.9 billion, according to its annual report. European revenue jumped 34 percent last year to $1.4 billion.