In a significant shakeup of its tax structure, US tech giant Facebook is to abandon its previous tax arrangement, whereby all advertising revenue was routed via its international headquarters in Ireland, and instead book sales in the country in which they take place
In a statement chief financial officer Dave Wehner said: ‘Today we are announcing that Facebook has decided to move to a local selling structure in countries where we have 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.’
The move will affect how Facebook pays taxes in 30 countries including Germany, France, Spain, Italy, the Netherlands, Belgium, Norway, Poland, and Sweden.
The online multinational has attracted considerable criticism over its stance in recent years, most notably in the UK after it emerged that Facebook had paid just £4,327 in tax in 2014.
In April 2016, the company began booking more advertising income through its UK office, instead of Ireland. That significantly boosted revenue and profits for its UK business, and has meant that so far it has paid higher taxes.
Facebook paid £5.1m in tax in the UK last year, up from £4.2m in 2015, on revenues of £842m.
Wehner said: ‘We believe that moving to a local selling structure will provide more transparency to governments and policy makers around the world who have called for greater visibility over the revenue associated with locally supported sales in their countries.’
While the tech giant said it expected that it will make this change in countries where it has a local office supporting advertisers in that country, but also stated this was ‘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,’ Wehner stated.
Facebook’s headquarters in Menlo Park, California, will continue to be the company’s US headquarters and the offices in Dublin will continue to be the site of the international headquarters, the company confirmed.
Report by Pat Sweet
