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Facebook Paid 0.3% Taxes On $1.34 Billion Profits 592

theodp writes "Facebook is unlikely to make many new (non-investor) friends with reports that it paid Irish taxes of about $4.64 million on its entire non-U.S. profits of $1.344 billion for 2011. 'Facebook operates a second subsidiary that is incorporated in Ireland but controlled in the Cayman Islands,' Kenneth Thomas explains. 'This subsidiary owns Facebook Ireland, but the setup allows the two companies to be considered as one for U.S. tax purposes, but separate for Irish tax purposes. The Caymans-operated subsidiary owns the rights to use Facebook's intellectual property outside the U.S., for which Facebook Ireland pays hefty royalties to use. This lets Facebook Ireland transfer the profits from low-tax Ireland to no-tax Cayman Islands.' In 2008, Facebook COO Sheryl Sandberg cited 'local world-class talent' as the motivation behind Facebook's choice of tax-haven Dublin for its international HQ. Similar tax moves by Google, Microsoft, and others who have sought the luck-of-the-Double-Irish present quite a dilemma for tax revenue-seeking governments. Invoking Supreme Court Justice Potter Stewart's famous common sense definition of ethics ('Ethics is knowing the difference between what you have a right to do and what is right to do') is unlikely to sway corporations whose top execs send the message that tax avoidance is the right thing to do and something to be proud of."
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Facebook Paid 0.3% Taxes On $1.34 Billion Profits

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  • Re:Tax avoidance (Score:5, Informative)

    by SerpentMage ( 13390 ) on Friday December 28, 2012 @06:22PM (#42414425)

    Oh so you would like to pay for the police, the firemen, the roads, and everything else? We can argue about a bloated government, no doubt. But to argue that we should pay zero taxes make NO SENSE WHATSOEVER.

    For if we don't pay taxes you better be prepared to pay Vinny down the street a bit of money to make sure that you don't get mugged, robbed, or killed.

    Simply put, you sir are a nutter! Even Adam Smith knew we had to have a government and had to pay taxes!

  • Re:Tax avoidance (Score:5, Informative)

    by bmo ( 77928 ) on Friday December 28, 2012 @06:22PM (#42414429)

    You live in a complex society where the police are obliged to protect your personal property and your life, where food is not full of melamine, where we have a military that enforces our economic interests, where roads improve the flow of goods and services.

    Pay for it.


  • by haystor ( 102186 ) on Friday December 28, 2012 @06:23PM (#42414437)

    Government makes stupid laws.
    Companies follow those laws.
    This is the fault of the companies and requires more government.

  • Re:FB tax avoidance (Score:4, Informative)

    by hguorbray ( 967940 ) on Friday December 28, 2012 @06:40PM (#42414611)
    If they are making money off US citizens who are in the US then it seems they should be paying US taxes, but I bet the line is blurred when they are selling 'services' such as allowing marketers access to FB users...

    Certainly when HP sells products overseas they are required by many of the countries in which they sell products to keep the bulk of the revenue for those products inside that country -it seems odd that US companies are allowed to get away with this in the US when they are not allowed to do this elsewhere?

    Here is something I found in the way of background -although the source is somewhat disreputable ;-)


    I guess one of the big differences is that most other countries use the 'Territorial' tax system in which the home country's taxation of foreign profits is only the difference between the foreign tax rate and the local one -afaiu

    Can someone without an axe to grind as far as laissez faire capitalism, etc explain how this works?

  • Re:Tax avoidance (Score:5, Informative)

    by asylumx ( 881307 ) on Friday December 28, 2012 @07:10PM (#42414893)
    Greece is a perfect example. Also, take a look at the French revolution. Why did that happen? Because the peasants had no bread.
  • Re:Tax avoidance (Score:4, Informative)

    by ColdWetDog ( 752185 ) on Friday December 28, 2012 @07:43PM (#42415181) Homepage

    If you are really at a 50% tax bracket, you need to do one of two things (perhaps both). First, get a tax adviser and second, consider moving out of New York City or wherever it is that you're getting shafted for on local / state taxes. That's about 20% higher than it should be unless you have some really odd financial issues.

  • by Wizzu ( 30521 ) on Friday December 28, 2012 @08:02PM (#42415347)

    paid Irish taxes of about $4.64 million on its entire non-U.S. profits of $1.344 billion

    The problem here is that Ireland offers ridiculously low tax rates to attract investment and employment.

    This isn't due to a ridiculously low corporate tax rate in Ireland (it's 10% or more according to wikipedia, depending). The country with ridiculously low corporate tax is Cayman Islands (no corporate tax). Ireland's subsidiary pays licensing fees to the subsidiary in Cayman Islands, so that on paper the Ireland profit becomes miniscule, and thus the tax sums are low too.

Where it is a duty to worship the sun it is pretty sure to be a crime to examine the laws of heat. -- Christopher Morley