Facebook’s Cayman Islands tax shelter revealed in company filings

[DonViejo]

By Juliette Garside, The Guardian
Thursday, December 5, 2013 21:41 EST

Facebook is facing a fresh controversy over its tax contributions after company filings revealed the social network exported an estimated £645m earned in the UK and other overseas markets to the Cayman Islands tax haven last year.

Facebook uses a subsidiary in Ireland to collect advertising revenue from around the world. Accounts filed in Dublin this week show that business is booming, with international earnings rising to £1.5bn in 2012, up from £840m in 2011. But the Irish government collected just £4.4m in tax from the world’s largest social media company last year.

Using a complex web of subsidiaries in a tax structure known as the “double Irish”, employed by a number of American multinationals, Facebook shelters much of the money it earns outside its home market from governments around the world.

Facebook and Google account for around half of the £6bn expected to have been spent on advertising on the internet in Britain this year, according to eMarketer. But Facebook has put most of this income out of reach of the taxman.

full article
http://www.rawstory.com/rs/2013/12/05/facebooks-cayman-islands-tax-shelter-revealed-in-company-filings/

[BlueStreak]

1. Simple really

Step 1: Set up a fake corporation in Ireland, where they don't charge much corporate tax

Step 2: Have your lawyers assign title to your most valuable property to this fake corporation

Step 3: Report all your profits under this fake Irish corporation, and report all your other corporations as "Gee golly, we're really struggling to make a buck -- can't pay any taxes today."

Step 4: After you have gathered up that income and evaded taxes in all the other countries where the money was actually earned, move the money to the Cayman Islands, where it can't be traced or seized. You are home free.


Done and done.

[jmowreader]

3. It's more complex than that.

http://en.wikipedia.org/wiki/Double_Irish_arrangement

It seems to me like it'd be cheaper to just pay your fucking taxes like patriotic Americans do than to run this BS arrangement, but that's the thing about the extremely rich: they will spend $100 on a tax avoidance scheme designed to get them out of paying $1 to the IRS.

[BlueStreak]

5. No way. This saves them billions.

For the cost of a couple of lawyers -- literally something well under a million bucks a year -- they are able to do tax evasion that saves them 1000 times that much. Your characterization is way off in proportions.

Yes, if a smaller business tried to do this, it would hardly pay (or not work at all). That's just one of the institutional advantages the biggest corporations have set up for themselves. Bigness begets bigness. From that billion dollars they save, they can easily afford to spend 10 million, even 100 million on lobbyists and bribes (aka perfectly legal "campaign contributions&quot in order to keep these gimmicks available.

[Historic NY]

2. Wouldn't it be nice if they couldn't transfer those funds into the mainland US...

more than say 9999.00 at a time.

[Old Codger]

4. another good reason

To not be on facebook