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Facebook Used Loophole to Avoid Taxes

It appears Facebook is about to overhaul its current tax structure so that it pays tax in the country where profits are actually earned after previously using a loophole to avoid them
It appears Facebook is about to overhaul its current tax structure so that it pays tax in the country where profits are actually earned after previously using a loophole of re-routing it via Ireland.

It appears Facebook is about to overhaul its current tax structure so that it pays tax in the country where profits are actually earned.

Wow, sounds strange to even read the above comment.

The change comes after pressure on large firms over their tax status from governments and the public.

Up until now, Facebook used an Irish subsidiary in order to process UK sales through Ireland for tax purposes. In simple terms… to increase their profits.

Facebook has said it will start attributing advertising revenue in countries where it is earned instead of re-routing it via Ireland.

When you think of Facebook does the country of Ireland come to mind? I doubt it. More thank likely California comes to mind. Maybe even Silicon Valley if you are more familiar with the actual business.

Dave Wehner, Facebook’s chief financial officer, said “In simple terms, this means that advertising revenue supported by our local teams will no longer be recorded by our international headquarters in Dublin, but will instead be recorded by our local company in that country.”

Does that actually sound “simple” to you? Especially when you think of the recent bipartisan beating Facebook, Google and Twitter went through as they faced tough questions about the role their platforms played in Russian attempts to divide the American electorate.

How was this revenue accounted for by Facebook?

In September, Facebook acknowledged that it had discovered 3,000 ads from 470 accounts connected to Internet Research Agency. It’s since revealed that those accounts collectively created 80,000 pieces of content that may have been shared, both organically and through ads, with 126 million people.

What did Facebook do with revenue gained from these ads?

Facebook says it deleted the accounts connected to the Internet Research Agency because the accounts were fake, a violation of its terms of service. But “how” do they know all of the accounts were fake? Aside from the obvious location of a user, did Facebook simply decide to turn off any account they did not like?

More importantly, why wasn’t Facebook monitoring the source of ads on their platform with such scrutiny prior to the 2016 election?

From what we have learned about the Russian ad campaigns leaked to the public is the content simultaneously supported conservative and liberal viewpoints.

It criticized immigrants and praised them. It denounced racists and denied its existence. Conservatives have used this as a defense of President Trump, arguing that Russians had no influence on the election outcome. They may have a point.

The only thing we know for sure is that Facebook sold ads and therefore generated revenue from it all.

Facebook’s revelation that Russians had purchased ads prompted speculation about whether the Russians had help targeting the ads, potentially from the Trump campaign. Facebook has stated that they have no evidence voter lists were used.

We do know Facebook founder and CEO Mark Zuckerberg hired Democratic pollster Joel Benenson.

Benenson was a chief adviser to Barack Obama and the chief strategist of the failed Hillary Clinton 2016 campaign. His official bio boasts that he is “the only Democratic pollster in history to have played a leading role in three winning presidential campaigns.”

Zuckerbergs wife, Priscilla Chan, has also brought in 2008 Obama campaign manager David Plouffe and former Virginia governor Tim Kaine’s communications adviser Amy Dudley to expand their nonprofit, the Chan Zuckerberg Initiative.

Whether Zuckerberg uses his Democratic team to explore other, more personal projects, remains to be seen. But all of this is looking like big business, in this case, tech business, playing politics as usual and maximizing profits along the way.

Editor's note: The opinions in this article are the author's and do not necessarily represent the views of StraitBuzz.
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