Facebook is changing tack in terms of how its ad revenue will be recorded.
Yesterday evening (12 December), Facebook announced that it is to begin booking international advertising revenue locally rather than redirecting it via its international headquarters in Dublin city centre.
In a blog post, Dave Wehner, Facebook CFO, said that the company is moving to a local selling structure in countries where it has an office, in order to support sales to local advertisers.
Facebook will book revenues from large advertisers in other major EMEA markets in the countries in which those revenues were earned, with the taxes on these revenues set to be paid there rather than here in Ireland.
Revenues from SMEs and individuals outside of the US will still be booked through Facebook here in Ireland.
A change in protocol at Facebook
“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,” explained Wehner.
He said Facebook believes that moving towards a local selling structure will provide greater levels of transparency to policymakers and governments around the globe “who have called for greater visibility over the revenue associated with locally supported sales in their countries”.
Wehner said Facebook expects the change will be made in countries where it already has offices, but noted that each country is unique so it may take some time for new systems and invoicing protocols to be set up “to ensure a seamless transition to our new structure”.
New revenue changes to to roll out by 2019
The changes will be implemented throughout 2018, with a view to them being completed by the first half of 2019.
It will cause a significant shrinkage in Facebook’s Irish tax bill, although it is not known just how much of the revenues booked through its Dublin base are connected to large advertisers.
At present, the EU is looking into legislative proposals to increase taxes on multinational companies, as it believes major tech firms are booking profits in certain EU countries to considerably shrink their tax bills.