Monday, July 11, 2016

Transfer pricing to avoid taxes

Facebook moves its intellectual property (IP) to Ireland in 2010:
That year, Facebook shifted the global rights for many of its intangible assets -- outside the U.S. and Canada -- to a subsidiary in low-tax Ireland. The IRS claims that, for tax purposes, the company understated the value of those assets by billions of dollars.
If a company transfers IP to a low tax jurisdiction, then it can charge subsidiaries in high-tax jurisdictions, like the US, a fee for using the IP, and thus shift profits to the lower-tax jurisdiction.

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