Facebook (NASDAQ: FB) could face a substantial increase in its tax debts following the closure of its business unit in Ireland, which was used to protect billion dollars in US tax revenue.
The social networking site was sued by the Internal Revenue Service for establishing the holding company in 2010, claiming that Facebook downplayed the value of assets in a bid to pay less tax in the United States. The temperature of London reported last week that the holding company paid just $ 101 million in Irish corporate taxes on $ 15 billion in profits in 2018, the most recent data available.
Repatriation of assets
According to The temperature, Facebook has hired liquidators to handle the liquidation of Facebook Ireland Holdings Unlimited, Facebook International Holdings Unlimited I and Facebook International Holdings Unlimited II, and in a statement to the newspaper acknowledged that this decision “is part of a change that best matches to our operating structure. ”
Facebook reportedly distributed the assets to its U.S.-based operations, a move that actually occurred in July and was made in response to recently passed and upcoming tax law changes that have been implemented in July. global scale.
The social networking platform generated $ 55.8 billion in global sales in 2018. But $ 30 billion, or nearly 54% of the total, passed through Facebook International Holdings I, a 39% increase from compared to the previous year.
Facebook paid $ 3.2 billion in taxes in total that year, or about 11% of its $ 25 billion in revenue.
The Times reports that holding companies like this are structured to pay dividends to the parent organization. Facebook’s Irish holding company paid it $ 14 billion in dividends in 2018.
Some $ 20 billion in assets were repatriated to the United States as a result of the technological actions movement.
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