Facebook gives in to pressure over Irish tax set-up

FACEBOOK has said it will no longer record its non-US revenue through Ireland in a major change to where it pays tax.

From next year taxes will be paid in the country where advertising profits are earned.

Revenue will be filed under the local company in the country where it is earned, chief financial officer Dave Wehner said.

The tech giant’s move follows pressure on large multinationals over their tax affairs from governments and the public.

Mr Wehner said: “We believe that moving to a local selling structure will provide more transparency to governments and policymakers around the world who have called for greater visibility over the revenue associated with locally supported sales in their countries.”

He said Facebook had decided to move to a local selling structure in countries where it had an office to support sales to local advertisers.

“In simple terms, this means that advertising revenue supported by our local teams will no longer be recorded by our international headquarters in Dublin, but will instead be recorded by our local company in that country.

“It is our expectation that we will make this change in coun- tries where we have a local office supporting advertisers in that country.

“That said, each country is unique, and we want to make sure we get this change right.

“This is a large undertaking that will require significant resources to implement around the world.

“We will roll out new systems and invoicing as quickly as possible to ensure a seamless transition to our new structure. We plan to implement this change throughout 2018, with the goal of completing all offices by the first half of 2019.”

Ireland has a corporation tax rate of 12.5% and has used the rate to attract multinational firms, whose taxes were worth around 80% of the country’s corporation tax receipts in recent years. Facebook was widely criticised after paying just £4,327 in UK corporation tax in 2014.

Corporation tax was charged at 20% on taxable profits, but Facebook’s accounts showed a loss of £28.5mn for the year in Britain, under an arrangement which treated UK operations revenue as a payment from Facebook Ireland for services.

The total corporation tax bill for the company — which has global profits of more than £1bn every three months — amounted to less than a worker on the average wage would pay in income tax and national insurance.