Arvind Lall, Lecturer in Taxation and Ethics in the Kent Business School responds to the news Facebook is to start paying taxes in the country where the profits are earned.
‘Huge profits are made from the community (or a country) by many multinational companies (MNC’s), but what is due back as its fair share of tax is not paid. The tax lost from these large MNC profits is substantial.
‘Most individuals and businesses in the country pay their fair share of tax which helps fund transport, communication, health, education and many other services all of which are used by the MNC’s, yet without a fair contribution towards them. Something is surely wrong with this ‘picture’.
‘Corporate citizenship and social contracts are terms that sometimes make a good moral case for obligations of ‘give and take’ in a community.
‘In my opinion Facebook appears to have made quite a sensible decision in the light of heavy public criticism of itself and recently of the Irish government too, by stopping to route its profits via Ireland and, pay its taxes locally in the country where these profits were earned, outside the US. However a caveat must remain as these are early days.
‘Much will depend on transparency and technical clarity of the profits declared locally (figures showing correct sales and acceptable expenditure deductions to arrive at the declared taxable profit), and governments will need to be alert to this to ensure that fair tax is paid by Facebook and any others that change to a local selling structure.’
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