Cough It Up: Facebook Admits UK Defeat, Agrees to Pay Corporate Tax

But after years of fighting against European Union and UK tax authorities and routing its profits through Ireland, the social networking giant will pay millions of pounds to the British government.

It's seen as a victory for Chancellor George Osborne, who introduced the Diverted Profits Tax in April 2015 and a defeat for Facebook, who has avoided paying its bills by basing its headquarters in Ireland.

The tax is targeting big multinational businesses that use contrived tax arrangements to divert profits from the UK.

"The main objective of the diverted profits tax is to counteract contrived arrangements used by large groups (typically multinational enterprises) that result in the erosion of the UK tax base," says the government.

As for Facebook, any income generated from its large advertisers will now be subject to corporation tax.

"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… 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," a spokesperson for Facebook said.

The spokesperson added: "in light of changes to tax law in the UK, we felt this change would provide transparency to Facebook's operations in the UK".

But Facebook isn't the only multinational corporation and pressure will be mounting on Google, Starbucks, Apple and Amazon who have also come under fire for moving money around to avoid paying their fair share of tax in the UK.