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Monday, October 25, 2021

Facebook Closes Irish Companies Due To Tax Dispute

The intellectual property of Facebook would get repatriated to the US following the IRS’s statement that the government is still owed taxes of $9bn. Facebook is closing the holding companies which it used for channeling billions of dollars of profits to avoid giving taxes to the UK, the US, and any other companies.

Facebook International Holdings Company Closed

The primary Irish subsidiary of the social media giant paid only taxes of $101 million while they recorded total profits of around $15 billion in 2018. The social media giant paid the holding company for using their intellectual properties. The holdings company recorded $30 billion in revenue in 2018 which is greater than half the global turnover of Facebook, which is around $56 billion.

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The decision of the social media giant of closing the Irish holdings and returning the intellectual property to the US arrived after the US IRS dragged the matter to court and claimed that the company owed above $9 billion for its decision of shifting all the profits of the company to Ireland in 2010.

Before its flotation in the stock market in 2012, the intangible assets of Facebook in 2010 were valued at $6.5 billion but according to the claims of the IRS, the original value appeared to be $21 billion. Google shifted its holdings of intellectual property from Ireland to the United States in January, and much before closing the tax loophole of “double Irish” which is typically used by the companies of the US for channeling their international profits to the tax havens such as Bermuda through Ireland.

The motive was to keep them out of the US. Under immense international pressure, Ireland decided to close down the scheme around 5 years ago, however, companies have till the end of this year to comply.

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