Facebook is to bow to intense public criticism and pay millions of pounds more tax in the UK, the company confirmed on Friday.
The social media giant has changed its structure so the majority of its advertising revenue secured in Britain, such as from major companies including Tesco, Sainsbury's, and Unilever, will now be taxed in the UK.
It had previously routed sales through Ireland, which has a lower tax rate and is where its international headquarters is located.
"On Monday we will start notifying large UK customers that from the start of April they will receive invoices from Facebook UK and not Facebook Ireland," a spokesperson told BuzzFeed News.
"What this means in practice is that UK sales made directly by our UK team will be booked in the UK, not Ireland. Facebook UK will then record the revenue from these sales.
"In light of changes to tax law in the UK, we felt this change would provide transparency to Facebook's operations in the UK.
"The new structure is easier to understand and clearly recognises the value our UK organisation adds to our sales through our highly skilled and growing UK sales team."
As reported by The Sun last week, government departments spent £489,329 in 2014–15 on ads with Facebook, 113 times more than the tech giant paid in UK corporation tax in 2014.
Facebook's move comes amid growing criticism of US tech companies for routing their profits through countries with low corporation tax rates such as Ireland and Luxembourg.
It will further increase the pressure on Google to pay more in the UK. It has faced a backlash after agreeing a deal with HMRC, the UK tax authority, to pay £130 million tax, prompting the influential Commons public accounts committee to describe the settlement as "disproportionately small" when compared to revenue Google generates from the UK.
The public accounts committee gave Facebook's move a cautious welcome. However, it said the move shows businesses choose how to structure their tax affairs and must "acknowledge responsibility for those choices".
Chair Meg Hillier MP said the committee remained concerned that corporations "have more weight" in the balance of power.
"Our Committee has repeatedly raised concerns about the effectiveness of HMRC in securing a fair deal for taxpayers from multinationals, most recently last month in our report which followed HMRC's corporation tax settlement with Google," she said in a statement.
"The work of the Public Accounts Committee and continuing high levels of public anger about the behaviour of some corporations have done much to move these issues up the political agenda and we will see the effects of Facebook's new arrangements in due course.
"Our Committee would reiterate its call for HMRC to take a lead in reforming international tax rules and to work with overseas tax authorities to secure lasting change in the international tax system."
BuzzFeed News contacted Google but a spokesperson declined to comment on whether it would revise its own tax structures to pay more tax in the UK.