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Huffpo canes Facebook over 'double Irish' deal, costing UK taxman millions

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By Noel Young, Correspondent

December 28, 2012 | 3 min read

Facebook is the latest US giant to get it in the neck over paying incredibly low taxes on foreign profits, leaving the British taxman for one gnashing his teeth.

Why Facebook loves Ireland

The Huffington Post today says that the social media giant used its offshore entities as a way to dodge the taxman, paying only a 0.3 percent tax rate on more than a billion dollars in foreign profits.

And if you thought FB set its European HQ up in Dublin because it likes the Guinness , think again.

In 2011, Facebook Ireland paid just $4.7 million in taxes on its entire non-U.S. profits of $1.4 billion, says Huffpo.

Facebook was able to slash its tax rate by using an accounting manoeuvre known as the "Double Irish." Advertising companies that bought space on any of Facebook's non-U.S. sites in 2011 paid Facebook Ireland.

The Irish headquarters then moved that royalty income to other subsidiaries, such as entities in the Cayman Islands, and posted a $24 million loss in the European office -- thus avoiding a hefty tax bill.

The Huffpo broadside takes up the case first highlighted in the Guardian earlier this week .

Last year Facebook,with UK revenues of £175m , paid just £238,000 in UK corporation tax – less than the average pay and bonus of its UK-based staff.

A spokeswoman for Facebook told The Huffington Post, "Facebook complies with all relevant corporate regulations including those related to filing company reports and taxation."

Google and Apple, as already reported, have also used their Irish subsidiaries to lower their tax load. Google saved billions in taxes by shifting its profits through Ireland and the Netherlands to Bermuda.

Amazon and Starbucks, also cut their British tax bills using the same technique via other European countries.

Facebook's Irish ploy could further stoke anger on both sides of the pond about how little U.S. companies are paying in European taxes, says Huffpo.

"The United Kingdom would like to see more tax money from companies that make hundreds of millions of pounds in the country. "

In a statement to HuffPo, Facebook defends its decision to place its international headquarters in Ireland.

"We have our international headquarters in Ireland that employs over 400 people, and a series of smaller local offices providing support services all over Europe," a Facebook spokeswoman said.

"Dublin was selected as the best location to hire staff with the right skills to run a multilingual high-tech operation serving the whole of Europe."

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