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Facebook to pay taxes on earnings in each country

FACEBOOK has said it will pay tax in countries where profits are earned in a global overhaul of its tax structures.

The change comes after pressure was heaped on large firms over their tax affairs by governments and the public.

Now the social media giant has vowed to pay taxes in each country outside the US where advertising profits are earned. The move will affect how Facebook pays taxes in Germany, France, Spain, Italy, the Netherlands, Belgium, Norway, Poland, and Sweden.

Facebook’s chief financial officer Dave Wehner said: ‘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.’

He expects the change to be implemented worldwide by the first half of 2019. In the UK, there was outrage after it emerged Facebook paid just £4,327 corporation tax in 2014, less than a worker on the average wage would pay in income tax and National Insurance.

At the same time, the site more than doubled the amount it paid British workers in bonuses to £35.4million.

Corporation tax was then charged at 20 per cent on profits. But Facebook’s accounts showed a loss of £28.5million under an arrangement which treated UK operations revenue as a payment for services from Facebook Ireland, where corporation tax is 12.5 per cent.

Last year the site ended the practice and it has paid higher taxes in the UK.