Originally posted by WhereIsTheBatman
In the mean while, the average Joe who bailed out the banks pays the full price.
I believe this article is speaking about the tax paid on Facebook's foreign revenue (profits made outside of the US).
Originally posted by randomname
how can running a free website result in it making $1.3 billion and then posting a $24 million loss.
something fishy in marine land.
I believe it works something like this and it's quite simple, two things needed:
1. A country with low to no Taxes - Facebook uses the Cayman Islands
2. A country that has a treaty with other countries that prevents being taxed twice. - Facebook uses Ireland.
Facebook Cayman Islands is the parent and licenses the rights to run Facebook outside of the US to Facebook Ireland. Facebook Ireland than licenses
the rights out to all other Non-US Countries where Facebook has a presence.
So say Facebook UK makes 1 Billion Pounds in Profit, Facebook Ireland sends them an invoice for 99% in royalties/licensing fees, reducing their profit
down to 10 Million Pounds.
Now Facebook Ireland has 990 Million Pounds in Profit, so Facebook Cayman Islands invoices Facebook Ireland for 99% in licensing rights, this leaves
Facebook Ireland also with approx. 9.9 Million Pounds in profit.
Cayman Islands now posts the profit of 990 Million Pounds @ the Cayman Island tax rate of 0%.
The purpose of having Ireland is that they have the treaty that now prevents other countries attempting to double tax Facebook. As they have already
been taxed by Ireland for the 9.9 Million Pound Profit posted.