Facebook Slapped With RM38 Billion Tax Bill By The IRS

Facebook is being slapped with a lawsuit yet again, and this time, it’s coming from the US’ Internal Revenue Service (IRS). The country’s tax collection agency says that the social network owes approximately US$9 billion (~RM37.7 billion) in taxes, including interest and penalties.

The IRS reportedly determined that Facebook had undervalued several of its intellectual properties. When it sold them to a subsidiary in Ireland nearly a decade ago. For context, Ireland is considered a corporate tax haven for companies, and moving its money through its own subsidiaries is typically the norm for multinational companies.

As you can imagine, the timing of the IRS’ lawsuit isn’t going to do any favours for Facebook. Last year, the social media platform agreed to US$5 billion (~RM21 billion) fine issued by the US Federal Trade Commission (FTC). In total, the fine amount that is to be paid to government agencies now sits at US$14 billion (~RM58 billion). Oddly enough, Facebook had also spent a similar amount for royalties and cost-sharing payments, according to Reuters.

Facebook isn’t taking this fine sitting down. The company defended its action to undervalued its IPs, stating that the deal with its subsidiary was made before Facebook’s IPO and the development of its digital advertising platform. Further, it also stated that low valuation reflected the risks typically associated with its international expansion.

(Source: Reuters via Techspot)

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