Facebook is closing some of the companies that were key to its Irish tax havens. The Sunday Times and The Guardian report that Facebook is winding down three Ireland holding companies and moving their intellectual property to the US, increasing the company’s exposure to taxes in the US, UK and elsewhere.
A spokesperson said the decisions reflected “recent and upcoming tax law changes” governments were implementing worldwide.
The social media giant, like other tech companies, has caught flak for using arrangements in Ireland to avoid paying taxes in other countries. The IRS sued Facebook in 2016 to learn more about its practices, and followed up with a court battle arguing that it owed over $9 billion and had masked its true value. Similarly, G20 countries have been pressing for tax law overhauls aimed at major tech firms. Facebook is acknowledging that it will pay more taxes regardless of its earlier efforts at creative accounting.
This won’t necessarily lead to windfalls for the US, UK and other countries. However, it could be more in line with what you expect. In the UK, for instance, Facebook paid just £100,000 more in taxes in 2019 despite profits jumping over 25 percent. Those payments are likely to climb dramatically in the near future.