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Facebook tax row: Zuckerberg ‘OK’ with paying more in Europe

Mark Zuckerberg has claimed that he would be ‘happy’ for Facebook to pay more in tax, provided that rules on digital sales in Europe are first straightened out.

US tech giants, including Facebook, Google, and Amazon, have been criticised for the way they do business in Europe, specifically, the practice of booking sales in countries with lighter tax regimes than others, regardless of where in Europe the ad revenue was generated.

Governments across the continent have been pushing the argument that taxes should be based on wherever the digital activity takes place, not where the companies are headquartered.

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The Facebook chairman, CEO, and co-founder has now come out in favour of efforts made by the OEDC (Organisation for Economic Co-operation and Development) to align tax rules, which could bring in additional tax revenue worth $100bn (£75.1bn) across the continent.

According to a statement obtained by the BBC and Reuters, Zuckerberg is due to say in a speech at this weekend’s Munich Security Conference:

“I understand that there’s frustration about how tech companies are taxed in Europe.

“We also want tax reform and I’m glad the OECD is looking at this. We want the OECD process to succeed so that we have a stable and reliable system going forward. And we accept that may mean we have to pay more tax and pay it in different places under a new framework.”

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The deadline for a full deal to be agreed between US tech companies and the EU was the 31st of December 2020, with the technical points of the deal to be agreed earlier, this July. The Brexit transition period is also currently due to expire on 31/12/20.

The UK government had already announced plans to introduce a separate digital sales tax of its own this April. This is expected to generate up to £500m a year – although the recent resignation of Sajid Javid as chancellor, and the appointment of Rishi Sunak as his replacement may put the brakes on this.

British digital services tax plans aim to tax the revenues of search engines, social media platforms and online marketplaces at 2%. The main rate of UK corporation tax on all profits is currently 19%.

In 2018, Facebook paid £28.5m in corporation tax to HMRC, despite taking in a record £1.65bn in sales. If the proposed tax had been in place at the time, the UK could have earned an additional £33m that year.

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