Does Facebook Have Tax Problems Too?
As Reuters reported on Friday, Italian officials have increased their efforts to collect taxes from large corporations, like Google, to ensure that they are paying the required amount. Now, the Italian government has launched a new probe into Facebook’s accounting practices. As investigative sources told the publication, tax officials had collected documents from the company’s offices in Milan last month.
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Facebook has denied any wrongdoing so far. “Facebook pays taxes in Italy as part of its business activity in the country and strictly complies with Italy’s fiscal rules,” the social network said in a statement emailed to Reuters.
Last week, the Italian police began to investigate Google’s tax practices in the country. An earlier tax probe, launched in 2007, found that the company had failed to declare income and still owed more than 96 million euros of sales tax from 2002 to 2006. According to an economy ministry document seen by Reuters, tax officials found that Google had developed a system to transfer profits from its Italian operations to Ireland, which has a more favorable tax regime.
A United Kingdom investigation into Starbucks’s accounting practices, which began in October, revealed that the coffee chain had engaged in complex accounting methods to minimize its tax liabilities; Starbucks had reported losses in the United Kingdom, while simultaneously telling investors that the unit was the company’s best performing unit in its overseas markets.
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