21/06/21

IRELAND: Facebook ‘welcomes’ higher tax rates in jurisdiction and OECD.

As published on independent.ie, Monday 21 June, 2021.

Facebook “welcomes” G7 moves on tax and admits it will “likely pay more tax” as a result.

The company’s global policy director, Nick Clegg, said that existing tax rules are “built for a bricks and mortar world and just don’t fit an increasingly online world”.

The former UK deputy prime minister said that Facebook accepts that global rules are changing.

“We accept that this will mean that Facebook will most likely pay more tax and in different countries,” he said.

“I can speak on behalf of Facebook in saying that we strongly welcome the growing consensus in the G7 and ultimately the OECD to rewrite the international tax rules on a multilateral and non-discriminatory basis.”

Mr Clegg’s remarks come after the Minister for Finance, Paschal Donohoe, said that Ireland will try to defend the country’s 12.5pc corporate tax rate amid the OECD negotiations.

Facebook employs 6,000 people at its European base in Dublin.

Asked by the Irish Independent whether the company has calculated how much extra tax it might pay under revised OECD rules, Mr Clegg said that it has not.

“No, of course not, it’s not for us, but for governments first to decide what the rules are and then we will abide,” he said.

“Our average effective tax rate over the last 10 years was just shy of 21pc, which is roughly in line with the OECD average. But we pay the vast majority of the corporation tax where our HQ is located, in the US.”

He said that the company is sometimes unfairly maligned in Europe on the issue of tax.

“It's not that we don't pay tax,” he said. “But from a European perspective on corporation tax, it’s an issue that we pay tax where we’re corporately headquartered, which is squarely in line with long established corporate tax principles. If and when those principles change, we’ll abide by those rules.”

Mr Clegg said that recasting the rules would be “tricky” for governments.

“Governments are trying to recalibrate not just where the value is generated or where the corporate headquarters is, but also where users are located. And that's a very different sort of fundamental basis upon which the tax cake is divided.”

Mr Clegg said that he is to meet the OECD’s secretary general in the coming days.

“One of my teams has been actively providing technical inputs to the OECD Secretariat for two years to help them work out how to do this,” he said.

“I had several meetings with the former OECD Secretary General and am meeting the new Secretary General shortly in the days to come. We have a self interest in having clear, non-discriminatory rules which are evenly applied and easy for us to follow, even though they might well mean we are paying more taxes in different countries.”