Facebook Inc (NASDAQ:FB) has taken a decision to be more transparent in the taxation matter involving the United Kingdom. Facebook was criticized for paying only $6,128 in taxes in the country in 2014, which was less than the average worker in Great Britain. For this purpose, the social media firm has indicated its decision to stop routing ad sales of its biggest clients in the region through Ireland. As a result, there is a threat of an increased tax bill for the firm.
Changes In Invoices From April
As part of increasing transparency, Facebook will make changes in invoicing its big clients starting in April. The company told Bloomberg that it would inform its big advertising customers on Monday that they would get their invoices issued by its United Kingdom office instead of Ireland. Sales done by the Britain team would be booked in the region itself. The social media will credit such sales revenue to the UK region, thereby paying taxes on it.
As far as small business sales were concerned, there appear to be no changes in invoicing the clients from Ireland. This is because the ads were booked online and there was no intervention of staff in the process. International headquarters would continue to remain in Ireland. As a result, it will continue to perform as before for most of the other clients.
Tax Burden To Increase
The latest move means that Facebook will have to pay a higher tax to the UK government for the revenue generated beginning in April. In the UK along with the rest of the world, there have been pressures on governments to overhaul tax structure. The company did not reveal the amount of tax liability increase in the coming years.
Facebook was not the only firm accused of paying almost no taxes. Alphabet Inc (NASDAQ:GOOGL) also faced a similar issue and settled £130 million in taxes last January.