A multi-billion dollar dispute between Facebook and US tax authorities began playing out in front of a judge on Tuesday.
The Internal Revenue Service contends that Facebook dodged about $9 billion in taxes, while the leading social network says it is actually owed a refund, according to US media reports.
“This trial is about transactions that took place in 2010, when Facebook had no mobile advertising revenue, its international business was nascent, and its digital advertising products were unproven,” spokesperson Bertie Thomson stated.
“We look forward to presenting our case in court and putting an end to this dispute.”
Shifting profits to low-tax countries is a routine practice by international companies, and the judge’s decision in this case is seen as a possible harbinger about whether that tactic will become less effective.
The IRS contends that Facebook undervalued technology it licensed to its Irish subsidiary, thereby cutting the amount of money that came to the US for taxation here.
The judge is to hear from an array of Facebook executives during the course of proceedings.
