Facebook: European Commission says tax agenda having ‘real impact’

The European Commission says its drive to put pressure on digital giants to pay more corporation tax is "having a real impact", following Facebook's decision yesterday to stop booking much of its global revenue in Dublin.

“We note with interest Facebook’s announcement,” said a commission official. “We welcome any initiative that brings declared tax revenue closer to where value is created.”

The official declined to comment further on Facebook’s decision, until the commission had seen the specifics of its proposal.

“However, what is certain is that our taxation agenda is having a real impact. The commission will continue its work in 2018, notably with proposals to ensure a fair and effective taxation of the digital economy,” the official added.

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Facebook on Tuesday said that it will begin the process of restructuring its non-US operations so that all revenues from larger advertisers will be booked in the countries where the ad was sold, instead of Dublin.

Corporation tax

This means that the corporation tax on the profits from those ads will be paid in those countries, instead of, as is currently the case, in the Republic.

Facebook last year diverted more than €12 billion of global revenues to Ireland, attracting the ire of governments in Europe and further afield who argue its existing strategy deprives them of tax.

The European Commission has been to the forefront of attempts in Brussels to rein in the tax avoidance activities of web giants, many of whom maintain their international headquarters in Dublin.

The commission is holding a public consultation on proposals to better tax the digital economy, with a deadline of next January. It is also understood to be holding a separate consultation process with European Union member States.