Cantillon: Facebook story could yet yield tax return
Any OECD measure to combat tax base erosion has potential to see Ireland get a bigger slice of the Facebook pie
In its US Securities and Exchange Commission filing, Facebook noted the potential for its affairs to be affected by changes to US tax law, or those of other jurisdictions. Photograph: Reuters/Thomas Hodel
This newspaper’s report on Thursday highlighting the vast chasm between Facebook Ireland Ltd’s €1.7 billion turnover in 2012 and its €1.9 million Irish corporation tax charge was picked up by the Financial Times yesterday, after which it went “viral” on the internet.
From the news sites of Forbes to the Guardian, the Daily Mail to Bloomberg, the interest and associated commentary were huge. Which is not surprising when you look at the figures in the latest annual return filed by Facebook Inc to the Securities and Exchange Commission in the US.
By the end of 2012, the technology behemoth had 1.06 billion monthly active users, up 25 per cent on the position at the end of 2011, and 618 million daily active users, up 28 per cent on the end of 2011. On average, according to the filing, 350 million photographs were uploaded to Facebook every day during the last quarter of 2012, and 240 billion photographs had been shared on the platform by the year’s end.
Given that sort of public engagement with the company, and the ongoing controversy over the taxation of multinationals, media businesses were quick to spot a story of general, and global, interest. Some commentators were quick to suggest that Ireland should do something to close down the tax-avoidance strategies that are used by Microsoft, Google and Facebook, by way of subsidiaries registered here – for the most part missing the point that the United States, home to all of these companies, could change its laws to bring an end to the tax schemes.
Of course, given its nature, the most logical way to approach the issue is by way of international co-operation, which is exactly what seems to be happening by way of the Organisation for Economic Co-operation and Development and its project to tackle tax-base erosion.
Facebook, in its US filing, noted the potential for its affairs to be affected by changes to US tax law, or those of other jurisdictions. As they put it, the US and other countries “are considering changes to their tax regimes in an effort to raise additional tax proceeds from companies such as Facebook”.
Ireland is the most important country in Facebook’s tax affairs after the US. Global revenue for 2012 was $5 billion, so Facebook Ireland’s €1.7 billion is a big part of its overall book. Given Ireland’s 12.5 per cent corporation tax rate, any OECD measure introduced to combat base erosion has the potential, if it goes our way, to see Ireland get a bigger chunk of the Facebook pie. Not to mention those of Microsoft, Google, and others.
Patching up pharma relationships
When Elan put itself on the market after its bruising battle with Royalty Pharma, US over-the-counter medicines group Perrigo seemed to appear out of nowhere to offer the company an alternative and more profitable exit from independent existence.
But Perrigo was not unknown to Elan. In fact, the companies’ connections go back 15 years and involve the product for which Elan first made a name for itself – the nicotine patch.
The patch was the brainchild of Elan founder Don Panoz, and was the reason for his establishment of a drug-delivery business in Athlone when he first arrived in the country to found Elan.
Initially the patch was a prescription product but, in 1999, Elan and its US partner, a then unheralded company called Perrigo, announced they had secured FDA approval to change the status of the patch to an over-the-counter product. And Perrigo secured the rights to market and distribute the patch in the US. The Elan executive behind the move was one Seamus Mulligan, then president of Elan Pharmaceutical Technologies.