Wednesday, 13 December 2017 07:42

Facebook changes policy, to book local ad revenue locally Featured


Facebook has changed its approach to booking its ad revenue, announcing that it will move to a local selling structure in countries where it has an office to support local advertising sales.

The company chief financial officer, Dave Wehner, said in a blog post that this meant local advertising revenue would no longer be recorded by the social media giant's international headquarters in Dublin.

Multinational technology companies have been accused of not paying a fair amount of tax in countries around the world, with Apple, Google and Microsoft also being in this bracket.

In September, nine members of the European Union backed a move to tax multinational tech companies on their revenue, not profits.

The same month it was reported that Facebook was still booking most of its Australian revenue in Ireland and the US.

tax evasion US big

Australia has held parliamentary hearings into tax evasion, and summoned the chief executives of big tech companies to explain their tax payments.

The Australian Taxation Office released data last week on companies that paid no tax in 2016-16. Among the tech multinationals that paid nothing were IBM, Acer, BAe Systems, FoxConn, Citrix and Unisys.

Wehner said Facebook's management believed that moving to a local selling structure would "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".

The fact that local revenue will be recorded in a particular country does not necessarily mean that the taxes paid by Facebook will increase as costs for intangibles like intellectual property will also be debited to the country in question.

Wehner said it was expected that this change would be effected in countries where we have a local office supporting advertisers in that country.

"That said, each country is unique, and we want to make sure we get this change right," he added.

"This is a large undertaking that will require significant resources to implement around the world. We will roll out new systems and invoicing as quickly as possible to ensure a seamless transition to our new structure.

"We plan to implement this change throughout 2018, with the goal of completing all offices by the first half of 2019."

Wehner said Facebook's headquarters in Menlo Park, California, would continue to be its US headquarters while the Dublin offices would remain its international headquarters.

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Sam Varghese

Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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