Facebook to book advertising revenue locally

Social media giant Facebook said on Tuesday it would start booking advertising revenue locally instead of re-routing it via its international headquarters in Dublin although the move is unlikely to result in it paying much more tax.

Corporate taxation has become a hot-button topic in the wake of revelations of tax avoidance schemes by multinationals which have led to calls for companies to pay more tax while Europe has begun exploring options for taxing digital giants.

Facebook Chief Financial Officer Dave Wehner said the company had decided to move to a local selling structure in countries where it has 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,” Wehner said in a blog post.

“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.”

The European Commission is working on legislative proposals, expected in March, to increase taxes on multinational digital companies, who are accused of paying too little in the EU by booking profits in low tax countries where they have their EU headquarters, like Ireland and Luxembourg. Among the options the EU executive is considering to quickly raise taxes on tech giants is a levy on revenues from advertising activities, according to an EU document published in September. 

Wehner said Facebook would implement the change throughout 2018 and aim to complete it by the first half of 2019.