Tia Oja,

Correspondent (Business)

 

IRELAND – Late 2012 stories of well known social and new media companies and their shady tax businesses started coming out. One by one major companies were put under the magnifying glass as tax reports went public for everyone to see and interpret. This trend in tax avoidance does not seem to fade as once again a major company is questioned for its tax procedures.

It is the turn of Facebook to join the group of companies that are being criticized over tax avoidance. Facebook paid only 0.3% in taxes when its revenue was around a whopping €1 billion. All in all, the company paid a bit under € 3.5 million euros in taxes.

Facebook has been using the same tricks as many other globally renowned companies, such as Amazon, Google and Starbucks. The trick is to use European tax jurisdictions.

Starbucks recently admitted having a special tax deal with the Dutch government, while sales for Amazon are being dealt with in Luxembourg. Facebook has favored Ireland as some of its revenue goes through the company’s Irish office. Also, Google’s advertising space is sold in Ireland.

Facebook allegedly picked Ireland as the country to run its International Head Office, as it holds in it the best possible people for the task.

In Facebook’s case, the advertisers paying the social networking company are paying directly to the office in Ireland. This is the case when advertising space is being bought anywhere else in the world than on Facebook’s US sites.

According to Facebook’s representative, the company’s tax businesses are handled legally and according to the law.

It is remained to be seen how these major global companies will handle their taxes in the future and whether they will feel the need to change their procedures.