Facebook accused of 'dodging tax' by using loophole to channel cash through Cayman Islands

Facebook channelled profits through a series of tax havens in order to pay just  £2.9m of corporation tax on more than £800m of overseas profits in 2011, it has been reported.

Like Google and Apple the social networking site is said to have used its headquarters in Ireland to avoid tax liabilities in the UK before directing earnings to a subsidiary in the Cayman Islands.

British companies that buy advertising on Facebook must do so via Facebook Ireland Ltd which entitles the company to sidestep HM Revenue and Customs and authorities in other higher-tax jurisdictions, reported the Sunday Times today.

As a result less than £240,000 was paid to the UK taxman. The Dublin office, with a staff of 400 people showed a gross profit of £840million in 2011. Despite this, Facebook Ireland posted a loss of £15million for the year after hundreds of millions were routed to a subsidiary in the Cayman Islands and to its parent company in the U.S.

Labour MP John Mann recently spoke out about the company's actions, calling them 'disingenuous and immoral'.

'They benefit enormously from the country's internet infrastructure but do nothing to fund it. It's like driving a car with no tax. We would stand for it on our roads so why stand for it on the net?,' he said.
Accounts for Facebook Ireland revealed that last year £440m was moved into an Irish sister company before being diverted to a subsidiary company in the Cayman Islands. Read more >>

World's rich hide at least $21T offshore

British Overseas Territory of the Cayman Islands (Photo credit: Wikipedia)

With about 55,000 inhabitants, the Cayman Islands should not be a well-known name in the rest of the world, but the tiny Caribbean territory has become famous as a tax haven for the world's super rich. According to a new report, the Caymans - along with the other dozen or so international havens for wealth like Switzerland and Bermuda - are the holders of so much of the world's capital, entire regional economies could be moved on it.

The Tax Justice Network has just released a report estimating that the world's tax havens house anywhere from $21 trillion to $32 trillion of money that governments cannot tax. "This offshore economy is large enough to have a major impact on estimates of inequality of wealth and income; on estimates of national income and debt ratios; and - most importantly - to have very significant negative impacts on the domestic tax bases of 'source' countries," James Henry, the report's author and a former chief economist at consultancy McKinsey told the Guardian.

The problem of money leaving countries to avoid the tax man is not just reserved for the world's economic powers. The amount that has left developing countries for tax havens could have been more than enough to pay off their debts to the rest of the world, The Guardian reports. About $800 billion has left Russia since the early 1990s. Read more >>

Home Owners Across the Nation Sue All Bank Servicers and Their Offshore Havens

San Francisco police officers monitor protestors that are staging a demonstration in front of the Wells Fargo Bank headquarters. 

Marketwatch
In a lawsuit alleged to involve the largest money laundering network in United States history, Spire Law Group, LLP -- on behalf of home owners across the Country -- has filed a mass tort action in the Supreme Court of New York, County of Kings.

Home owners across the country have sued every major bank servicer and their subsidiaries -- formed in countries known as havens for money laundering such as the Cayman Islands, the Isle of Man, Luxembourg and Malaysia -- alleging that while the Obama Administration was publicly encouraging loan modifications for home owners, it was privately ratifying the formation of these shell companies in violation of the United States Patriot Act, and State and Federal law.

The case further alleges that through these obscure foreign companies, Bank of America, J.P. Morgan, Wells Fargo Bank, Citibank, Citigroup, One West Bank, and numerous other federally chartered banks stole hundreds of millions of dollars of home owners' money during the last decade and then laundered it through offshore companies. The complaint, Index No. 500827, was filed by Spire Law Group, LLP, and several of the Firm's affiliates and partners across the United States.

Far from being ambiguous, this is a complaint that "names names." Indeed, the lawsuit identifies specific companies and the offshore countries used in this enormous money laundering scheme. Federally Chartered Banks' theft of money and their utilization of offshore tax haven subsidiaries represent potential FDIC violations, violations of New York law, and countless other legal wrongdoings under state and federal law.  More...