With political pressure mounting on digital giants to pay more taxes, Facebook has announced plans to move to a local selling structure in countries where it has an office — a move aimed at paying tax in the country where profits are earned. Also Read - WhatsApp violates Indian users' rights by denying dispute resolution claims Centre
Currently, advertising revenue supported by Facebook’s local teams are recorded by its international headquarters in Dublin, Ireland. The change in its selling structure announced on Tuesday means that advertising revenue supported by the local teams would be recorded by its office in that country. Also Read - Facebook to pay French news publishers for using its content
“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,” Dave Wehner, Chief Financial Officer, Facebook, wrote in a blog post. Also Read - Facebook’s new name could be Meta or Horizon, or will it be called FB?
The social media giant is expected to start paying tax on its local operations across roughly 30 jurisdictions outside the US including France, Germany and eight other EU countries where it has local offices, according to Politico.eu.
“It is our expectation that we will make this change in countries where we have a local office supporting advertisers in that country. That said, each country is unique, and we want to make sure we get this change right,” Wehner said
“We plan to implement this change throughout 2018, with the goal of completing all offices by the first half of 2019,” Wehner added. The company has been under pressure from the US and Europe for its tax practices. The European Commission feels that digital companies pay less tax than it should.