According to the news reported by The Times, Facebook is closing three of its Ireland holding companies that were its Irish tax haven and moving their intellectual property to the US.
Big Corporations, like Facebook had shifted its resources to several subsidiary corporations as it is a popular tax structuring strategy. By transferring the properties to Ireland, the profits within Ireland are only 12.5 percent compared to the 35 percent in the US which generally leads to lower tax rates.
But why is Facebook closing its Ireland holding companies?
The Tech Titan was avoiding to pay large amount of taxes because of its arrangements in Ireland but was caught up in criticism by the IRS in 2016, which led to a court hearing in which IRS demanded that Facebook owed over 9 billion dollars which it has failed to pay in taxes and according to the US Agency, Facebook owes around 1.7 million dollars for at least 2010 which isn’t much for a tech giant like Facebook, but it claims they can only manage to pay around 3 to 5 billion dollars if IRS really wants it to pay the money for the last few years.
According to Facebook, the IRS still hasn’t come to the decision on exactly how much the property transfer is worth but the IRS isn’t likely to show sympathy towards Facebook in terms of the money as it has previously been on war with Facebook over the auditing process claiming that Facebook did not provide all the data it needed for the auditing, while Facebook agrees to disagree with this statement.
Facebook has accepted the fact that now it has to pay more taxes than it previously used to regardless of its previous attempts at creative accounting, which won’t necessarily be a lot of money for countries like the UK or US but a lot more than what you expect. In 2019, Facebook payed 100K pounds extra in taxes even after profits jumping over 25 percent.
The prices are most likely to increase in the future, but companies won’t be able to use the creative accounting as a means to restore taxes because tax agencies are trying to close these loopholes as soon as possible because of the pressure from the US and EU regulators. Hence, due to the changes in the Irish Laws, companies most probably won’t be stuck in a dispute over taxes.
Photo: REUTERS/Aaron P. Bernstein
Read next: To end the war against Apple, Facebook should stop presenting itself as the arbiter of small businesses
Big Corporations, like Facebook had shifted its resources to several subsidiary corporations as it is a popular tax structuring strategy. By transferring the properties to Ireland, the profits within Ireland are only 12.5 percent compared to the 35 percent in the US which generally leads to lower tax rates.
But why is Facebook closing its Ireland holding companies?
The Tech Titan was avoiding to pay large amount of taxes because of its arrangements in Ireland but was caught up in criticism by the IRS in 2016, which led to a court hearing in which IRS demanded that Facebook owed over 9 billion dollars which it has failed to pay in taxes and according to the US Agency, Facebook owes around 1.7 million dollars for at least 2010 which isn’t much for a tech giant like Facebook, but it claims they can only manage to pay around 3 to 5 billion dollars if IRS really wants it to pay the money for the last few years.
According to Facebook, the IRS still hasn’t come to the decision on exactly how much the property transfer is worth but the IRS isn’t likely to show sympathy towards Facebook in terms of the money as it has previously been on war with Facebook over the auditing process claiming that Facebook did not provide all the data it needed for the auditing, while Facebook agrees to disagree with this statement.
Facebook has accepted the fact that now it has to pay more taxes than it previously used to regardless of its previous attempts at creative accounting, which won’t necessarily be a lot of money for countries like the UK or US but a lot more than what you expect. In 2019, Facebook payed 100K pounds extra in taxes even after profits jumping over 25 percent.
The prices are most likely to increase in the future, but companies won’t be able to use the creative accounting as a means to restore taxes because tax agencies are trying to close these loopholes as soon as possible because of the pressure from the US and EU regulators. Hence, due to the changes in the Irish Laws, companies most probably won’t be stuck in a dispute over taxes.
Photo: REUTERS/Aaron P. Bernstein
Read next: To end the war against Apple, Facebook should stop presenting itself as the arbiter of small businesses
