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Facebook likely to pay $3 to $5 billion in taxes

Facebook has said that it would challenge the Internal Revenue Service (IRS) assessment in the US Tax Court when it becomes final.

The Social Media giant Facebook is liable to pay an extra tax bill amounting to $3 Million to $ 5 Million. The tax bill relates to an investigation done by AUS Internal Revenue Service (IRS), regarding a previously disclosed review of the pricing of assets Facebook transferred to its Irish subsidiary.

IRS has been exploring, how the tech company has transferred their assets to Ireland and whether it deliberately tried to minimize the tax it paid in the US, a report in the Guardian said.

“The IRS issued the firm with a ‘statutory notice of deficiency’ on July 27, the company said in its quarterly financial filing, noting that it could have a ‘material adverse impact’ on its finances,” the report noted.

Facebook said that it would challenge the Internal Revenue Service (IRS) assessment in the US Tax Court when it becomes final.

Facebook broke out the possible loss in its earnings report, as a minimum of $3 billion and maximum of $5 billion. It would also be liable for interest lost, though any additional penalties are not known, the report added.

A Facebook spokesperson on Friday defended by saying that “Facebook complies with all applicable rules and regulations in the countries where we operate.”

The news came on Wednesday after Facebook had reported a huge quarterly profit jump, with net income leaping 186 per cent from a year ago to$2.05 billion and revenues surging 59 per cent to $6.4 billion.
Since 2013 the investigating agency, had been monitoring Facebook regarding the assets it had transferred in 2010 to its base in Dublin.

Ireland is known for its corporate-friendly tax structures; it has a corporate tax rate of 12.5 per cent, compared to the US rate of 35 per cent and 21 per cent in Britain.

The matter came to the fore when the IRS filed a lawsuit in San Francisco on July 6, suing Facebook over access to records related to the transfer.

The IRS has stated that Facebook has failed to attend seven appointments at the IRS office in San Jose, 19 miles from Facebook’s headquarters in Menlo Park.

 

IANS

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