Facebook's revamp of its global tax practices comes roughly a week before US lawmakers hope to complete a significant overhaul of the country's tax system, which may impose a low, one-time tax on profits that USA multinationals have amassed overseas.
"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.
The company is expected to start paying tax on its local operations across roughly 30 jurisdictions outside the United States including France, Germany and eight other European Union countries where Facebook has local offices.
The move echoes Facebook's March 2016 decision to stop booking its United Kingdom advertising sales through Ireland and instead pay tax on those sales in the UK. In the US, the company is locked in a battle with the Internal Revenue Service that may cost it more than $5 billion, plus interest and penalties, related to global operations that are reported by the Irish unit. "That said, each country is unique, and we want to make sure we get this change right". The European Commission has taken a hard stance against what is considers to be unfair tax practices, and last week the commission forced Apple Inc.to sign an agreement to pay $15 billion in back taxes to the Republic of Ireland.
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Facebook says they will roll out the new tax structure through 2018 with the completion date to be mid-2019.
Facebook paid just £5.1m in corporation tax in 2016, according to a Companies House filing.
That means that rather than directly route its revenue to its worldwide headquarters in Dublin, local policymakers and governments will potentially get an opportunity for greater visibility into the company's revenue related to local advertising sales.