Facebook will no longer route tax through Ireland in global shake up

Gladys Abbott
December 13, 2017

The announcement comes as policymakers push digital companies - many of which have set up shop in low-tax countries like Ireland and Luxembourg - to be more transparent about where they pay corporate tax.

"In simple terms, this means that advertising revenue supported by our local teams will no longer be recorded by our global headquarters in Dublin, but will instead be recorded by our local company in that country", Wehner said in a blogpost.

As Facebook begins to expand even further internationally, it will also have to ensure that it has the right systems in place with local governments so it can operate without a ton of pressure.

This will affect its operations in nearly 30 countries where it has a physical presence such as a sales office.

The move should "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", Facebook said in a statement.

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University College Cork-based economist Seamus Coffey, an expert in corporation tax and head of the Government budget watchdog the Fiscal Advisory Council, said the move won't radically change Facebook's tax bill.

In a major overhaul today, the firm said it will make the change in every country outside the United States where it has an office.

Wehner admitted it was a "large undertaking" and would require "significant" resources, taking time to roll out. The company, however, was criticized for not paying enough tax after its British revenues quadrupled, to £842 million, over the same period. Much of the company's earnings are said to be derived from intellectual property, created in the U.S. but now likely held in Bermuda or another low tax jurisdiction, so deductible royalties will need to be paid to the country holding the IP.

Facebook has since come under pressure from the US and Europe for its tax practices.

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