Facebook courts goodwill by moving to local tax structure
Social media kingpin Facebook has had a troubled relationship with tax authorities recently. Like many large technology companies, Facebook opts to centralize its tax through an Irish subsidiary, meaning it doesn’t pay taxes on sales in the countries they’re made. This is entirely legal, and a relatively common practice. But in recent years, it’s become increasingly unpopular with the public. Now, Facebook is looking to garner approval from governments and the public by moving to a local tax structure, that will see it pay tax where its sales originate.
Facebook’s share price has appreciated by 52% year to date
SOURCE: Yahoo Finance
Facebook moved its international business operations to Ireland in 2010, but the company has now vowed to adopt a “local selling structure” in countries where it has an office to support sales to local advertisers. This is a response to pressure from tax authorities in the U.S. and Europe, which have imposed heavy fines on Google and Apple already.
The company’s chief financial officer, Dave Wehner, released a statement on Tuesday, saying: “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.”
Wehner said that the changes will be implemented in 2018, with an internal goal of having all offices switched over to local tax structures by the first half of 2019. The Italian Treasury released a statement praising the company for its decision, calling it an “important change that is a step in the right direction.”
Dominion holds Facebook in its Global Trends Ecommerce Fund.
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