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

Facebook to book revenues in different countries as Irish tax loophole to expire

Facebook has since come under pressure from the United States and Europe for its tax practices.

Facebook has said it will start booking advertising revenue in countries where it is earned instead of re-routing it via Ireland, although the move is unlikely to result in it paying much more tax.

Facebook has announced a change to its financial policy, meaning some advertising revenue will no longer be recorded in Ireland.

But Facebook's accounts showed a loss of £28.5million under an arrangement which treated United Kingdom operations revenue as a payment for services from Facebook Ireland, where corporation tax is 12.5 per cent. The move will affect how Facebook pays taxes in Germany, France, Spain, Italy, the Netherlands, Belgium, Norway, Poland, and Sweden.

That significantly boosted revenue and profits for its United Kingdom business, and has meant that so far it has paid higher taxes.

It now re-routes revenue through its global headquarters in Dublin and attracted criticism in the United Kingdom after it was shown to have paid just over £4,000 in tax in 2014.

Facebook paid £5.1m in tax in the United Kingdom past year, up from £4.2m in 2015, on revenues of £842m. It already made such a change in the United Kingdom a year ago under political pressure there, and is now essentially mirroring this worldwide.

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.

Taxes are paid on profits, and "the huge difficulty with large companies is trying to determine exactly what the profit is", he said.

The European Commission is looking for ways to collect more tax from tech companies, which pay less than half the taxes of brick-and-mortar businesses, according to a report published by the commission in September.



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