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Facebook has announced plans to restructure its global tax affairs so that it records ad revenue locally rather than channeling it through its international HQ in Dublin, Ireland.
The social networking giant, along with other technology firms, has faced growing criticism over the way it reports its taxes, particularly in the European Union. A number of technology companies have been accused of setting up elaborate structures to minimize the amount of taxes they pay.
With Europe currently exploring new ways to tax tech giants such as Facebook, the company has taken the initiative and announced that changes are coming over the next couple of years.
“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,” explained Facebook chief financial officer (CFO) Dave Wehner, in a blog post.
The company’s international HQ will continue to be in Dublin, but in countries where Facebook has local offices already supporting advertisers, the company said that it intends to begin implementing changes throughout 2018 and into 2019 so that it can file ad revenues there.
“This is a large undertaking that will require significant resources to implement around the world,” added Wehner. “We will roll out new systems and invoicing as quickly as possible to ensure a seamless transition to our new structure.
It’s not clear yet how much extra tax Facebook will pay as a result of this, and there is still enough wiggle room for plans to change further down the line.
“It is our expectation that we will make this change in countries where we have a local office supporting advertisers in that country,” noted Wehner. “That said, each country is unique, and we want to make sure we get this change right.”
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