Facebook to overhaul its tax structure worldwide
Facebook will move its global tax and revenue base from Ireland and begin booking advertising locally in every country where it operates.
Following criticism from the EU, Facebook will change the way it pays its taxes and it will pay where the profits are earned instead of shunting them through an Irish subsidiary. The move would impact Facebook's tax bill in 30 countries including in the UK, Spain and Germany.
Facebook's chief financial officer Dave 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."
He said in simple terms, this will means that advertising revenue will no longer be recorded by the international headquarters in Dublin, but will instead be recorded locally in each country's office.
In the wake of the public outrage in the UK in 2014 when it was revealed that Facebook had payed just £4,327 in taxes, in 2016 the company started to book more advertising income through the UK.
This social network, along with other large companies like Apple and Google, took advantage of the so-called Double-Irish loophole by which revenues could be reported in Ireland, reducing its liabilities for corporate tax given the lower tax rate on the Emerald Isle.
Earlier in 2017, Bruno Le Maire, France’s finance minister, called on Europe to "make Google, Amazon and Facebook pay what they owe to European taxpayers."
Nevertheless, according to the Irish government the loophole was expected to close by 2020.
When fully implemented, that would result in a large loss of international income that was being routed through Ireland, . although the change was not expected to affect job numbers at its Irish operations.
There were currently more than 2000 employees working in the Dublin Facebook office and last month the company promised "hundreds" more jobs.
Menlo Park in California will remain the group's headquarters, with Dublin the seat of the company's 'international headquarters', not far from a new London office that was said to be creating 800 new jobs in the British capital.
Wehner said it was "a large undertaking that will require significant resources to implement around the world", with new systems and invoicing to be rolled out throughout 2018, with the goal of completing all offices by the first half of 2019.