Facebook's Irish tax move 'increases pressure on others'

Jon Howard
December 13, 2017

The European Commission is looking into ways to tax digital companies like Facebook as it seeks to raise money from an industry that the commission says provides less tax than it should.

Facebook is changing its tax structure so that it will pay taxes in the country where sales are made, rather than funneling everything through its Irish subsidiary.

Facebook had already said that it would book ad revenue in the UK if it came from UK business, under pressure from the UK government. As a result, advertising revenue generated by its local teams will no longer be recorded in Dublin, but will instead be recorded by its local company in that country.

The change will apply to countries where the social network has dedicated offices.

Non-US sales from from SMEs and individuals who advertise on Facebook using its automated booking system will continue to be booked through Ireland.

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Wehner admitted it was a "large undertaking" and would require "significant" resources, taking time to roll out.

Facebook stressed the changes will have no jobs impact here, where it employs more than 2,000 workers, and that Dublin remains its worldwide headquarters.

Chief Financial Officer Dave Wehner said it means "that advertising revenue supported by our local teams will no longer be recorded by our worldwide headquarters in Dublin, but will instead be recorded by our local company in that country". The company, however, was criticized for not paying enough tax after its British revenues quadrupled, to £842 million, over the same period.

Its move is sure, however, to lead to anxiety within Government at the first tangible evidence that European pressure over Ireland's role as a linchpin in the tax avoidance of multinationals is having an impact. Yahoo, meanwhile, shifted €463 million of global sales to Dublin a year ago.

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.

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