Facebook Stashed Millions In The Caymans To Avoid Paying Taxes
Facebook reportedly transferred about $700 million to its Irish office and then to a Grand Caymans subsidiary to limit what the multinational corporation owed in corporate taxes last year.
As previously reported by The Inquisitr, Google employed a similar tax avoidance strategy in 2011 by shifting $9.8 billion to a Bermuda shell company.
The method using shell companies to minimize the tax bite is known as the “Double Irish” according to the London Telegraph:
“The move forms part of a complex tax structure known as a ‘Double Irish,’ where large royalty payments are moved from international subsidiaries in order to pay tax in low rate regimes, usually based offshore.”
According to the Raw Story, this is how Facebook structures the whole thing to maximize profits:
“Facebook sets up two Irish subsidiaries, the first of which owns the non-US rights to its intellectual property, but is a tax resident of the Cayman Islands, which charges no tax. This Cayman Islands-based Irish company then licenses its intellectual property to the second Irish company. These royalty payments are subtracted from the second (Irish Irish) company’s revenues before it gets its tax bill, letting it book much lower income than it would otherwise be able to. In Facebook’s case, The Guardian reports that it paid nearly $1.2 billion to itself in licensing and royalties. So despite bringing in gross profits of over $1.35 billion for the year, the impoverished Facebook Ireland actually recorded a $24 million loss.”
Facebook championed the way it sets up its tax shelters according to London’s Daily Mail:
“A spokesman for Facebook defended its accountancy and said it complied with all relevant regulations and was acting within the legal bounds of taxation.
” ‘Facebook complies with all relevant corporate regulations including those related to filing company reports and taxation,’ he said.
” ‘We have our international headquarters in Ireland that employs over four hundred people and a series of smaller local offices providing support services all over Europe”
Do you think Facebook pays its fair share of taxes?
