Facebook to record global ad revenue locally as political pressure mounts


Dublin will remain the site of its worldwide headquarters.

Facebook is changing its tax structure so it will pay taxes locally instead of putting its revenue through global headquarters in Dublin, Ireland.

"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.

Facebook Inc. announced a major change today to the way it reports advertising revenue outside of the USA, claiming that it wants to be more transparent with local governments and businesses.

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As part of its proposed changes, which will take effect starting early next year, Facebook said profits from the majority of its advertising revenue generated in countries where the company has a sales office will now be taxed locally.

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.

This moves comes after significant pressure and scrutiny from the United States of America and Europe for its tax practices. The social network now funnels all of its non-U.S. revenue through its worldwide headquarters in Ireland. The company lowered its tax bill further by paying large royalties to companies resident in the Cayman Islands, shifting much of the profit from Dublin to the tax haven.

With Europe now 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 will roll out new systems and invoicing as quickly as possible to ensure a seamless transition to our new structure", he said. That included agreeing to contribute tax revenue to national governments where the e-commerce giant has large operations across the Continent.