Facebook To Reform Tax Scheme

14th December 2017.

Facebook is to overhaul its tax structure so that it pays tax in the country where profits are earned, instead of using an Irish subsidiary.

Facebook has announced it will stop routing UK sales through Ireland for tax purposes.

This decision follows the recent Paradise Papers scandal earlier in the year, which exposed the evasive tax habits of wealthy individuals and corporations.

Facebook chief financial officer Dave Wehner confirmed the motive behind this change was to enhance transparency with Governments and policy-makers.

The move will affect how Facebook pays taxes in 30 countries including Germany, France, Spain, Italy, the Netherlands, Belgium, Norway, Poland, and Sweden.

In the UK, there was public outrage after it emerged that Facebook had paid just £4,327 in tax in 2014.

Professor Sikka of the universities of Sheffield and Essex suggested to the BBC that this new move by Facebook is an attempt to appease public opinion, while only taking a slight hit to its profits.

EU authorities are pursuing big technology companies for what they see as avoidance of tax when business is conducted through areas with lower tax jurisdiction.