Facebook to start booking advertising revenue in countries where it is earned

Facebook has said it will start booking advertising revenue in countries where it is earned rather than re-routing it via Ireland, although the move is not likely to result in it paying much more tax.

According to commentators, corporate taxation had become a controversial topic after revelations of tax avoidance schemes by multinationals, which have led to calls for companies to pay more tax, while the EU has started exploring options for taxing IT companies.

According to Dave Wehner, Facebook's chief financial officer, the company had decided to move to a local selling structure in countries where it runs  an office to support sales to local advertisers.

''In simple terms, this means that advertising revenue supported by our local teams will no longer be recorded by our international headquarters in Dublin, but will instead be recorded by our local company in that country,'' Wehner said in a blogpost.

''We believe that moving to a local selling structure will provide more transparency to governments and policymakers around the world who have called for greater visibility over the revenue associated with locally supported sales in their countries.''

According to Wehner, Facebook would implement the change throughout 2018 and aim to complete it by the first half of 2019.

Meanwhile Cliff Taylor, writing in the Irish Times points out that big companies are now being pushed towards transparency by public opinion and through threatened or actual changes in international tax laws.

He writes that the big players are also being pressed to pay a bit more in tax, and it is about time it is done. They now know that they are in a vulnerable position, having pushed the tax planning game way too far. But how much of the change being pushed is real and how much is PR will become clear only in time.