Meta to Offset Digital Taxes By Levying Location-Based Advertising Fee

Following in the Footsteps of Google and Amazon, Meta Announces Location-Based Advertising Fees to Offset Rising European Digital Service Taxes Starting June 1."

In the wake of several European countries mandating the collection of digital service taxes from social media platforms, Meta has announced on its official website that it will recover the costs from advertisers by charging them a location based advertising fee ranging from 2% to 5%. With this move, Meta is borrowing from the playbook of Alphabet’s Google and Amazon, which charge similar amounts. The advertising fee would apply from June 1 and cover all forms of image or video ads delivered on Meta platforms, including click-to-message campaigns and marketing messages. Also, other government-imposed levies would accrue additionally.

Importantly, it is not the advertisers’ business location but that of the audience which will determine the applicability of the advertising fee. This marks a departure from Meta’s strategy until now. The company explained the rationale behind the move in the same blog that announced the fee. It said, “Until now, Meta has covered these additional costs (digital service taxes). These changes are part of Meta's ongoing effort to respond to the evolving regulatory landscape and align with industry standards.” The six countries set to witness the levying of the fee are the UK (2%), France, Italy, and Spain (3%); Austria and Turkey (5%).

Meanwhile, the US Administration has decried the collection of the announced digital taxes by European countries as being inimical to the interests of US companies by discriminating against them. Thus, Meta’s latest move offers an insight into how tech companies are attempting to ease the pressures of being subjected to rising regulation and tax compliance across different jurisdictions.