Facebook is closing several Irish holding companies it uses to evade paying taxes in the United States, the UK, and hundreds of other countries where it has a profitable presence. The company has a main Irish subsidiary that paid only about $101 million in taxes while showing profits of more than $15 billion in 2018.
That is the last year for which records are available. Facebook companies around the globe paid the Irish holding company for use of its IP (intellectual property.)
Facebook International Holdings Unlimited Company had recorded revenue of $30 billion in 2018, which was more than half of Facebook’s total turnover for the year ($56 billion).
An IRS case
Facebook’s decision to close the Irish divisions and return its IP to the US, came after the IRS (Internal Revenue Service) took the social media platform to court, with a claim that it owed more than $9 billion linked to a 2010 decision to shift profits to Ireland.
Before the stock market flotation in 2012, Facebook had intangible assets worth $6.5 billion in 2010. However, the IRS claims that the actual value is $21 billion.
The decision to close the Irish holding companies was recorded by the Irish Companies Registration Office.
IP returns to the US
Facebook released a statement saying that the Irish holding company was closed as part of its plan to align with ideal operating structures. To facilitate the winding-up, Facebook Ireland Holding’s assets were distributed to its US parent company.
IP licenses related to international Facebook operations have been moved to the US, with Facebook saying it believes that the move is consistent with recent and upcoming tax law changes advocated by policymakers around the world.
Facebook’s tax evasion schemes and just how little tax they pay “beggars belief” according to Margaret Hodge, the Labour MP and chair of a parliamentary group concerned with responsible taxation.