Say anything about Twitter but at least it will pay tax
A view from Gideon Spanier

Say anything about Twitter but at least it will pay tax

No-one likes Twitter at the moment. Writing this ahead of Twitter's annual results, which were due late on Wednesday, it is clear that there are problems, with an exodus of senior US talent and the share price hitting a record low this week.

The #RIPTwitter hashtag that trended over the Super Bowl weekend, used in more than one million Tweets, was another blow. Users were rebelling against the company’s rumoured plan to change its timeline feed to an algorithm-based model that would show general Tweets of personal interest rather than just the latest posts from accounts that users follow.

In the UK, Twitter has slumped to 29th place in the App Store chart, while WhatsApp, Messenger, Instagram, Snapchat and Facebook are second, fourth, fifth, sixth and eighth respectively. Even Twitter loyalists think things might get worse before they get better, as the company struggles to convince advertisers about products such as Twitter Moments and Periscope.

Twitter has never been ruthless like Google or Facebook, which is why, a decade after it launched, it is still loss-making. However, there is one area where it is doing better than its peers – and that is its willingness to pay a fairer share of tax.

In a little-noticed move, Twitter’s last UK accounts, for the 2014 financial year, showed that it had stopped routing most of its £100 million-plus in annual UK ad sales via Dublin. Crucially, the company decided to recognise those sales in Britain, not just the marketing of its services. It took a considerable amount of internal discussion to make this change. But Twitter concluded it was the right thing to do.

The alternative was the reputational risk of artificially keeping most of the company’s sales offshore, pressuring UK staff not to put "sales" in their LinkedIn profiles and so on. This matters a lot when the row over Google’s £130 million payment in UK back taxes is still ongoing.

Twitter still processes about one-third of UK ad sales through Ireland (presumably from multinationals and the like) but two-thirds are being booked in London, according to the accounts. Google and Facebook, in contrast, have been processing an estimated 20 per cent of UK ad sales in London and 80 per cent offshore.

Some will dismiss Twitter’s actions. This is a struggling company with historic losses, meaning it will pay little tax for years. But that’s not the point. Twitter is choosing to book most of its sales where the ads are bought and pay a decent amount of UK tax when it makes a profit, even without a change in the law.

Other US tech giants could do the same but don’t. It is their choice. No-one should let them claim otherwise.