In the United States of America, there are laws that govern every single aspect of how a corporation is run and because of this micromanagement, billions of dollars is overseas and 30 million Americans are out of work or underemployed.
Now while these laws cover a wide variety of topics, there are some wonderful loopholes in the laws and that can be exploited. In this recession there is not too much to smile about, at least there is a break somewhere. When it comes to big corporations such as Facebook, Google, and Apple, loopholes result in the loss of millions saved for these companies so they can expand and higher new people.
The Irish Story
As per the US Tax Code, corporations are taxed at 35 percent. This is one of the highest rates of taxation in the world. There are plenty of other countries that charge much lower rates. Countries such as Ireland, Switzerland, as well as the Cayman Islands and Bahamas are veritable tax havens because of the low taxes they charge corporations.
One of the ways of exploiting the loopholes in the US Tax Code is for corporations to try tax inversion. In this process, corporations such as Google and Apple simply register certain parts of their business in other countries. Considering the fact that Ireland and Switzerland barely charge some 20 percent of tax, these conglomerates stand to save millions of dollars in tax every single year. When you are being ripped off by your home country, you have to find a way to survive.
US tech giant Facebook too has tried this ploy because they care about their future. Reports suggest that local revenue from Ireland is being booked in Ireland itself by Facebook. Smart move Facebook! Now will just stop being biased against conservatives and kicking them off your site! It is kind of hypocritical when it seems you do not care to pay higher taxes either.
According to latest reports, Facebook has just applied for an exemption pertaining to its business revenue in Australia. The global company is believed to have applied for exemptions under certain parts of the Corporations Act of 2009 in Australia. As per the Australian Securities and Investments Commission, this means that the company has never disclosed the actual value of its Australian earnings. The question that gets raised then is where and whether or not Facebook is booking its Australian revenue.
Hey, anytime you can beat the corrupt and nefarious IRS you are doing something good.
Industry sources say that Facebook’s Australian operations are quite expansive and it is likely that earn more than $60 million per year from it. Most of this revenue is being generated by advertising on the social media networking platform. However, when the advertisers were questioned, they said that they were being billed by a subsidiary of Facebook that is based in Ireland. It looks like Facebook has hired some savvy tax attorneys who are earning their keep!
Considering the fact that they will be paying much lower tax if they book their revenue in Ireland, it makes sense for the company. Facebook, of course, is hardly the first company to do so. Popular corporations that have already adopted this route are Apple Inc., AmEx, Google, and Pfizer. What do you expect when the IRS is corrupt and the White House is taxing the private sector every chance it gets!