Facebook has caved to the tax pressure.
The company is likely to pay millions more in U.K. taxes after making changes to its corporate structure that will stop revenue earned in the U.K. from being routed through Ireland.
Facebook had been accused of “profit shifting,” a common practice for multinational companies operating across Europe. After establishing a headquarters in low-tax countries, such as Ireland or Luxembourg, firms funnel profits from around the region to these jurisdictions in order to slash their tax bills.
Facebook faced a huge amount of criticism over the issue after paying just £4,327 ($6,100) in taxes in the U.K. in 2014.
“We felt this change would provide transparency to Facebook’s operations in the U.K.,” a Facebook spokesperson said.
“The new structure is easier to understand and clearly recognizes the value our U.K. organization adds to our sales through our highly skilled and growing U.K. sales team,” the spokesperson added.
European officials are trying to stop the practice of profit shifting, which they describe as “aggressive tax planning.” The European Union announced earlier this year plans for new set of laws that will allow countries to charge corporate taxes even if companies transfer their profits elsewhere.
Facebook is not the only U.S. corporation with a growing tax bill. Google has agreed to pay £130 million ($185 million) to cover years of unpaid taxes following an audit by British tax authorities.
Apple has agreed to pay 318 million euros ($344 million) to Italy for years of unpaid taxes, according to the Italian authorities.Amazon in May agreed to pay more taxes after funneling its sales through Luxembourg’s low-tax Grand Duchy.
Starbucks and Fiat Chrysler have also been ordered to repay millions after European officials found the companies benefited from illegal deals with Luxembourg and the Netherlands.
