Facebook Ireland is to lose UK sales
FACEBOOK is to stop routing sales from its major UK customers through Ireland.
This means that f rom April the social media giant is likely to pay millions of pounds on its profits to the UK’s taxman.
And while the move should mean l ess revenue going through Facebook’s Irish offices, it is, however, unlikely to have a major impact on Exchequer figures here.
Facebook currently treats the UK operations revenues as a payment from Facebook Ireland for services.
As a result, sales of advertising space to UK customers have not been subject to corporation tax in the UK but instead at the lower rates applied in Ireland, where the levy is 12.5%.
Facebook said in a statement yesterday that the new arrangement would provide greater ‘transparency’.
In 2014, Facebook paid €3.4million in corporate tax in Ireland, having booked €4.8billion worth of sales through its Dublin operations.
Speaking to the Irish Daily Mail yesterday, Brian Keegan, head of taxation at Chartered Accountants Ireland said: ‘It’s not unusual for multinational companies to have centralised invoicing centres.
‘Generally speaking, under international rules, the corporation tax would tend to be payable in the country where the invoices are raised.
‘So if there’s a change like that, you’d expect one country would receive more corporation tax than another.’
There was no i ndication from Facebook as to how much additional revenue can be expected to be routed through the UK as a result of the move – the scale of which will become apparent in 2017.
Smaller advertisers who deal with sales staff based in Ireland will continue to receive invoices from Ireland.
Mr Keegan also said: ‘Behind all of this is a set of OECD [Organisation for Economic Co- operation and Development] proposals. We’re seeing a lot of multinational companies, not just in Ireland, but internationally, restructure their affairs in anticipation of these new rules.’
The OECD published a number of proposals in Octo- ber last year which outlined that companies should pay tax in the countries where they conduct business in order to cut corporate tax minimisation.
A Facebook spokesman said yesterday: ‘On Monday we will start notifying large UK customers that from the start of April they will receive invoices from Facebook UK and not Facebook Ireland.’
Facebook had received criticism in the past after its 2014 results showed it paid just £4,327 (€5,593) corporation tax in the UK – less than what a worker on an average salary there would have paid in i ncome tax and National Insurance – despite recording revenues totalling £105million (€135million).
Other figures released under the UK Freedom of Information laws revealed that the UK’s tax authority, Revenue and Customs, paid £27,000 in 2015 for adverts on Facebook urging people to pay their taxes – more than six times the amount it received in corporation tax from the social media firm the previous year.
‘Preparing for new OECD rules’