fb theft Turns out our friends who are “in the advertising business” are major tax evaders. The Guardian recently ran a story reporting:

Filings for Facebook Ireland, through which all of the social network’s profits outside the US are channelled, show it paid the Irish tax authority €3.2m (£2.9m) last year.

Facebook is structured so that companies buying advertisements on the website in the UK, or anywhere outside of the US, have to pay Facebook Ireland. This allowed Facebook Ireland to make gross 2011 profits of £840m – or £3.1m per each of its 287 staff. Despite the high gross profit, Facebook Ireland was able to cut its tax bill to just €3.2m by using an accounting technique called the “Double Irish”.

The manoeuvre allows multinationals to move large amounts of money to other subsidiaries in the form of royalty payments. Facebook moved nearly £750m to the Cayman Islands and its Californian parent in licensing and royalty payments. After the transfers, Facebook Ireland reported a £15m annual loss, despite it accounting for 44% of the social network’s $3.15bn (£1.95bn) revenues.

Like Apple and Google, Facebook uses its Irish subsidiary to reduce its liabilities to HM Revenue & Customs and other European tax regimes. Amazon and Starbucks also cut their British tax bills by using the same technique via other European countries.

Business Insider notes that this represents an effective tax rate of 0.3%.

All perfectly legal, of course, in our continuing epoch of [Black] Reaganism.

7 Replies to “FaceTheft”

  1. Yes, these practices are abominable, and show the utter depravity of the predator CEO-managerial class.
    These Facebook, Google, Amazon morons are people that probably consider themselves “good” – but to punish the poor by deftly shielding corporate profits derived from pollution from government accounting shows what Craig dilworth painstakingly showed in “Too Smart for Our Own Good” – this is how humans proceed with technology, culture, and social institutions, and it drives the conditions of our existence into the threat of our species extinction.
    But, thanks, you motivated me to insert a little “Amazon tax avoidance” slam in my, yes, Amazon review of Dilworth’s monumental book – such are the small pleasures of minute rebellion that come from TCT’s work.

  2. They have won – my reaction to these types of blatant theft at this point is no reaction at all. I am completely desensitized to such type of info. Only a massive all out confrontation can pull me out of this apathy (which is probably a naive and counter-productive yearning).

  3. To consider this a “deft shielding,” or an “evasion” would imply that there was something being shielded or evaded. It does far too much credit to the tax code, just as assuming that Bush made “mistakes” in invading Iraq does far too much credit to him being the elected representative of an educated democratic republic.

    Tax codes, like “nations,” are designed to accomplish this sort of thing; they are expressly meant to extract resources from people who actually work, and redirect them to people who do not work. The precise details of “how” Facebook or any of the other entities “hide” their profits are incidental. This one’s series on tax theft, beginning here, is lengthy, but gives an introduction to some of the onshore tricks.

    Of course they will not pay anything like their share, and even if they did, it would be to governments they already controlled anyway–but “their share” is only their share inasmuch as the tax codes say it is, and the tax codes are written to hide, amidst arcane convolutions, fictional transfers that justify paying very little.

    When we come at this from a perspective that might have once been considered “liberal” or “progressive,” we do so from the background of believing that taxes are somehow good. We may have spent years fighting with Republicans who foolishly resisted taxes, because didn’t they realize that rich people needed to pay taxes, too? And that taxes were necessary to pay for a just society? And that if only the taxes were fair, it would all work out?

    But they had it half right, those stupid red-stater pseudo-libertarians who wanted the government out of their pockets. They foolishly followed a different set of rich people, but their initial sense of unfairness was accurate. Deep down, the right and the left were always aimed at the same place, and it was the center that subverted each. The false divisions, a.k.a. Tea Party v. OWS, keep the mob aimed at itself.

  4. That’s exactly why I’m so apathetic –> even the most mainstream, most obedient lap dogs of the economics profession (e.g. Mankiw, Summers, etc) have openly acknowledged that tax “cuts”/”credits” etc. are indistinguishable from public subsidies. So it’s not like they’re trying to sugar coat it or anything. The theft is now way out in the open, and it is accepted by everybody.

    Only a massive and quick ecological and energy crisis can save us. Without that, the system has taken a life of its own, and does just fine, thank you very much.

  5. Dear Marla, look to your dreams. Even if they take everything else vis-à-vis atoms and molecules, do not surrender your hope. The greatest thing they will imagine is sitting forever on a hoard of gems, surrounded by moaning, agonized slaves–an Eden that would end with them turning on themselves for still-greater riches, until the very last one sat eternally alone in gilded misery, and decided to end it all.

    If you look to an end of fire or starvation, then ultimately, you look to the same end that they do: the destruction of an irrevocably flawed existence.

    Shelter, instead, a light of truth, justice, and joy. Believe–if not that it is possible–that it is at least desirable. Hope for something that they will not hope for; that will set you apart from the darkness.

    This one shares a glimmer of your other vision: of catching the frail, white, old local richie in the post-nuclear wasteland, and letting him see how impotent his lies and procedures are, as he meets a genuine fist in a genuine struggle for the last can of Campbell’s in the harvested husk of the local grocery store.

    But that fantasy is, at its root, the same fantasy that drove that same elite liar to trick the legions of day-laboring proles into their current servitude. We must resist it, even if we find no rewards here. The dream of something better must have meaning and power, or nothing at all ever will. Take my love with you on your way. ~le~

  6. HA: The left and the right were always aimed at the same place, but the center subverted them.
    What “left” are you talking about? There was and is no US “Left,” as in an entity that possessed and social or legal or financial power.
    As far as the other Freeper stuff you say about taxes, and about the sainted goodness of the Gomer Pyles, well I’d say the same thing if I was surrounded by them.

  7. Actually, I believe all these things, I just fear we need the major crisis just for a fighting chance to pursue them ;(

    Either way, love your blog.

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