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Facebook’s Tax And Revenue Reporting Structure To Be Changed Globally

Facebook’s Tax And Revenue Reporting Structure To Be Changed Globally
Facebook is looking to bring in some major changes in its tax structures and its advertisement generation strategies.
While the social media platform is planning to relocate its base for global tax and revenue away from Ireland, it is also exploring avenues of booking advertising locally in each of the markets that it operates in. 
In a potential reaction to criticisms from the EU, Facebook is looking to alter the ways that it pays taxes for profits made. It is reportedly planning to make tax payments in the markets where it makes the profits from.  Earlier, this tech giant used to channelize all of its profits through its Irish subsidiary. 30 countries would be impacted in terms of the tax bills from Facebook.
"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," said Facebook's chief financial officer Dave Wehner.
Put in simple terms, this would mean that local offices in each of the countries that it operates in would record advertisement revenues compared to at present when it is recorded completely by its international headquarters situated in Dublin.
This process had already begun with Facebook recording more advertisement revenues through since 2016 after there was a huge furor there about the company having paid just £4,327 in taxes in 2014.
The very low rate of corporate tax applicable in Ireland on profit made by corporate with headquarters there has been taken advantage of by a number of global major IT companies including this social media platform, Apple and Google. The low rates can be used to pay much lower taxes than in some of the other markets where they earn the revenues from by simply recording the revenues in Dublin. This denies the revenue generating countries their fair share of the taxes for these companies.
Calls to the European countries to "make Google, Amazon and Facebook pay what they owe to European taxpayers" have been earlier given by Bruno Le Maire, France’s finance minister, earlier this year.
On the other hand, the Irish government hopes that the low corporate tax loophole would be pugged by 2020.
While such a change in tax regimen is not anticipated to result in any form of job losses in the IT companies when Dublin implements the policy completely, the companies themselves is expected to be paying larger amounts in taxes and thereby reduction in profits compared to what they now make by reporting revenues through Ireland.
At present, about 2000 people are employed at the Dublin headquarters of Facebook and the company has promised "hundreds" of more jobs there.
In the new plan, while Dublin would continue to remain the company's 'international headquarters', the group headquarters would still be at Menlo Park in California.
Wehner said it was "a large undertaking that will require significant resources to implement around the world" because the rolling out of new invoicing systems is huge and is expected to be completed in all of its offices by the first half of 2019.

Christopher J. Mitchell

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