The company uses a subsidiary in Ireland for collecting advertising revenue from all over the world. According to accounts filed in Dublin, Facebook’s business is booming, and its international earnings are rising to $2.5 billion in 2012, up from $1.4 billion in 2011. However, the Irish government only received about $7.3 million in tax from Facebook in 2012.
It is known that Facebook sheltered much of its profits outside its home market from governments around the world. British marketing researches reveal that Facebook and Google account for 1/2 of the $10 billion expected to have been spent on online advertising in 2013, but the social network has put most of this income out of reach of the taxman.
Moreover, Facebook paid no tax in the UK in 2012, despite earning an estimated $370 million in one of the biggest advertising markets in the area: the company takes full advantage of London’s status as a hub for EU advertisers. In response, the company claims that it complies with all relevant corporate regulations including those related to filing reports and taxation. Although Facebook’s UK operating company has over 120 employees, most of them working in advertising sales, the advertisers are billed via the Dublin-based subsidiary, Facebook Ireland Ltd.
It collected revenues of $2.5 billion in 2012, but this was wiped out by two items – the cost of sales and payments made to other group companies. Apparently, huge amounts of money go directly to the United States, with $1.1 billion being paid to the listed parent company in 2012. However, 1 billion was paid to Facebook Ireland Holdings for use of the platform.
This second Ireland-based subsidiary doesn’t file full public accounts, so the final destination of any payments out of Facebook Ireland Holdings can’t be traced. Nevertheless, there are clues to its ownership – filings reveal that Facebook Ireland Holdings is owned by a number of Facebook subsidiaries located in the Caymans – a jurisdiction not levying corporation tax.