Facebook tax court trial begins over Ireland offshore deal • Hacker News Board

Re: Facebook tax court trial begins over Ireland offshore deal

#221

Post by res0nat0r » Wed, Feb 19, 2020, 5:54 PM UTC

naringas wrote: post #195

Will_Do wrote: post #191

Earlier quoted context omitted.

My guess: Facebook makes an enormous percentage[^1] of its revenue in the US compared to Amazon/Apple. This might make it legally more tricky to argue that its Irish profits are not actually US profits. Also the IRS would definitely go after Amazon instead if it were politically motivated. [1]: Can't find absolute numbers but US users have 10x revenue per user: https://www.statista.com/statistics/251328/facebooks-ave…

> Also the IRS would definitely go after Amazon instead if it were politically motivated. amazon is running computing services for the government, which makes me doubt it. And what about Google?

Amazon is suing the government right now because of the abrupt cancellation of a 10 BILLION dollar government cloud contract that the likely were on the way to winning, that the Trump administration intervened with likely because they don't like the Washington Post (owned by Bezos) reporting of Trump's corruption.

https://www.latimes.com/business/technology/story/2020-02-13...

Also if FB is being picked out of all large companies by the Trump administration for something like this which most all large companies have been doing for decades it's easy to believe it may be to get FB back in line with the fake narrative of "stop silencing conservatives on FB" which is a narrative that doesn't exist, but has been pushed by Trump admin folks online for a while now.

Re: Facebook tax court trial begins over Ireland offshore deal

#222

Post by AnthonyMouse » Wed, Feb 19, 2020, 5:54 PM UTC

gamblor956 wrote: post #83

AnthonyMouse wrote: post #51

Earlier quoted context omitted.

The real issue is that "market price" legitimately has an amount of slop in it that can eat the company's entire profit. Suppose it costs $50M in salaries to create intellectual property which is then licensed to customers for $500M. Which one is the "market price"? It was sold for both prices, once by the employees to the company and then by the company to the customers. But the difference is a factor of ten. More t…

That is not how IP valuation works. The internal cost is not the measure; the potential or actually sales/licensing value of the IP is the measure.

What measure? It's two different transactions that occur under different terms at different times.

Suppose some code is written by an independent contractor instead of your employees. The contractor is in San Francisco. The San Francisco office pays the contractor, then does nothing more than immediately sell the rights to the code to the Ireland office for approximately the same amount. You just demonstrated that that was the market price -- the contractor was willing to accept it in an arms length transaction with an independent third party. The Ireland office could have just as well paid the contractor directly. What value is the San Francisco office supposed to be adding that justifies being awarded a significant fraction of the total revenue?

Re: Facebook tax court trial begins over Ireland offshore deal

#223

Post by ska » Wed, Feb 19, 2020, 5:55 PM UTC

pbalau wrote: post #197

mdszy wrote: post #159

Earlier quoted context omitted.

It's almost like the expectation that companies pay proper taxes to the countries they exist in IS pretty straight forward.

But really is not, since FB exists in US, UK, Ireland, Israel, France and many other places (see [0]). And not all the value was created in the same place. You could have (and I know examples) a piece of tech being developed in US and not make any money until a team in London picks it up, tweaks the crap out of it and makes some millions. And you need to note that engineers in London are employees of Facebook UK, a d…

While this is clearly true in general, it's exceedingly unlikely that attributing wealth mostly in the places where it is taxed less is really supported by the types of interactions you are talking about.

International development is complex, sure, but let's not pretend particularly with respect to Ireland that corporate structuring for tax avoidance isn't actually most (by $, not effort/people) of what is going on in practice.

Re: Facebook tax court trial begins over Ireland offshore deal

#224

Post by m0zg » Wed, Feb 19, 2020, 5:56 PM UTC

dboreham wrote: post #204

m0zg wrote: post #134

Earlier quoted context omitted.

Why do you think it's the "current regime" that's going after FB? Before Barr, the "current regime" couldn't even launch investigations into fake "dossiers" and things of that nature, and this stuff with FB started back in 2016. Could be the deep state. Could, in fact, be both, competing with each other. Not being able to control public opinion is a pretty terrible thing for all of them. In the good old days you coul…

Typo: fake "investigations" into dossiers.

But the dossier was literally fake, and moreover, paid for by the Clinton campaign.

Re: Facebook tax court trial begins over Ireland offshore deal

#225

Post by nradov » Wed, Feb 19, 2020, 5:57 PM UTC

AaronFriel wrote: post #183

hugh4life wrote: post #179

Earlier quoted context omitted.

The subpoenas you're talking about were purposely not taken to court.

Some were, and based on the timeline provided by the District Court it was clear that it would be nearly impossible for the matter to be resolved expediently. i.e.: before the next election, which the President was alleged to have abused his power to interfere in. It would rely on Congress trusting that the Supreme Court would deviate extraordinarily from its normal process and decide a matter in a very short time. A…

The Supreme Court will deviate extraordinarily from its normal process and decide a matter in a very short time when national politics are at stake. For example see Bush v. Gore, 531 U.S. 98 (2000). The whole case took only a few weeks, and the court delivered its decision just one day after oral arguments.

Re: Facebook tax court trial begins over Ireland offshore deal

#226

Post by ksec » Wed, Feb 19, 2020, 5:57 PM UTC

ska wrote: post #196

ksec wrote: post #178

Earlier quoted context omitted.

There is nothing in the case suggest the international schemes are illegal. Even the IRS is not trying to push for that. "The IRS argues that Facebook understated the value of the intellectual property it sold to an Irish subsidiary in 2010 while building out global operations" That is what IRS is trying to sue, on the ground that Facebook Ireland is now collecting substantially large revenue compare to what it was p…

You latter point doesn't really make sense to me. Isn't it true that a sale of IP should model the value of the IP over its lifetime in some reasonable way? And that would include a growth model for FB, no? If it could be shown that facebook intentionally undervalued it in order to make this scheme work better for them, wouldn't the IRS have a case?

>Isn't it true that a sale of IP should model the value of the IP over its lifetime in some reasonable way?

There aren't any "correct" way to measure it, but most of these IP are likely on percentage based. Sort of like 5G patents where they collect percentage of revenue. So the value I guess they did in 2010 were calculated based on ( projected ) 2012 ( its IPO ) figure. I think judging by majority of comment most people forgot how Facebook perform after its IPO, how its growth wasn't there, how Facebook Gaming Saved it, and how Mobile Internet ( aka Smartphone ) really took off, how they went to Mobile ( App ) First before the term was hyped by SV, and how it has grown possibly beyond most people would imagine. And that is not just Facebook itself, but also Instagram.

That is why I said comparing the value in absolute terms and not on relative terms doesn't make any sense.

At least that is judging from the limited amount of information given out by this FoxBusiness article. So again lots of assumption involved.

Re: Facebook tax court trial begins over Ireland offshore deal

#227

Post by vertig0h » Wed, Feb 19, 2020, 5:58 PM UTC

AaronFriel wrote: post #183

hugh4life wrote: post #179

Earlier quoted context omitted.

The subpoenas you're talking about were purposely not taken to court.

Some were, and based on the timeline provided by the District Court it was clear that it would be nearly impossible for the matter to be resolved expediently. i.e.: before the next election, which the President was alleged to have abused his power to interfere in. It would rely on Congress trusting that the Supreme Court would deviate extraordinarily from its normal process and decide a matter in a very short time. A…

Congress' unprecedented barrage of subpoenas force the administration's hand here. You may find it "absurd", but unprecedented animus requires unprecedented defensive measures.

Re: Facebook tax court trial begins over Ireland offshore deal

#228

Post by parhamn » Wed, Feb 19, 2020, 6:00 PM UTC

riazrizvi wrote: post #198

complianceowl wrote: post #157

Earlier quoted context omitted.

A lot of unfounded speculation in your comment. It seems more politically-motivated than rooted in facts. Secondly, have you done your research? Surely Facebook is not the only company being targeted by the government right now. I can assure you that, surely there are more. Thirdly, as much as I might dislike an administration, I won't take the giant, speculative leap as to assume that I know exactly what they're thi…

I understand that lawyers are taught to think logically and to support their arguments, so I would appreciate your analysis on our exchange, which looks to me like this: MY COMMENT: question / observation / speculation / hypothesis-with-circumstantial-evidence-to-support-speculation / expectation / expectation YOUR REPLY: assertion / speculation question / speculation / assertion personal observation question / self-…

Funny that you broke it down like that. I think since forums like this aren't for formal arguments, it's fair for the questions to be seen as more than suggestive, especially with your phrasing.

Re: Facebook tax court trial begins over Ireland offshore deal

#229

Post by danenania » Wed, Feb 19, 2020, 6:01 PM UTC

Mirioron wrote: post #163

rtkwe wrote: post #139

Earlier quoted context omitted.

I think there's room to argue that intentionally shipping all your IP to a lower tax country then charging the main company (that developed that IP in the first place) high fees to use that IP as a way to shift profits from higher tax areas to lower tax areas could constitute fraud. Either they sold/transferred the IP for way to little or they're charging themselves way too much because it's advantageous for taxes.

Here's the million/billion/trillion dollar question: how much is a brand worth? Clearly it is worth something. Facebook can do the most inane thing, but if they put their brand on it then it will have some value. To me this is the flaw in corporate taxation. I don't think you can ever work around this as long as you allow free trade. It just makes sense to tax them in other ways instead and perhaps simply get rid of…

Could the US simply impose a tax on all corporate profits, including international profits, for any company with any sort of nexus or business activity in the US? US citizens are basically already treated this way as individuals.

I imagine it would allow the rate to be drastically lower since the tax base would be so much larger. And while megacorps would obviously grumble, it would still be a profitable decision to pay the tax and remain in the US market given how lucrative it is. It would end all these country-to-country shell games once and for all, and would also provide some natural advantage to smaller homegrown companies that haven't gone international yet.

Re: Facebook tax court trial begins over Ireland offshore deal

#230

Post by AnthonyMouse » Wed, Feb 19, 2020, 6:03 PM UTC

three_seagrass wrote: post #219

AnthonyMouse wrote: post #194

Earlier quoted context omitted.

Then you'd be judging a lot of people wrongly, because that sort of thing happens all the time for entirely legitimate reasons. For example, at various points there have been federal tax credits for installing solar panels on your house or buying certain types of green cars. For a lot of people the credit would exceed their federal tax liability for the year. You're prepared to send them all to jail for that without…

I think by implying that the IRS went after them, the "weird trick" was not as legal as previously anticipated, despite being guidance from a professional. Appealing to popularity wouldn't make it anymore legal than appealing to professionalism.

Using the event of prosecution as proof of guilt sure would streamline some things -- we wouldn't need independent courts anymore.

Isn't this the plot to Judge Dredd?