Facebook is currently on trial for $9 billion in unpaid taxes, Reuters reports. The social media company is being sued by the IRS for shuffling money around in Ireland, a maneuver that is quite common among tech companies in order to take advantage of the country's low corporate tax rates.
The trial began on Tuesday and is expected to last between three to four weeks. Facebook CTO Mike Schroepfer, AR and VR chief Andrew Bosworth, and three other Facebook executives will be called to testify.
According to the IRS, Facebook understated the value of intellectual property sold to an Irish subsidiary in 2010, a move that essentially lowered the company's tax bill. A court filing reveals that Facebook Ireland paid Facebook U.S. more than $14 billion in royalties and cost-sharing payments from 2010 to 2016.
This international expansion by Facebook occurred prior to its IPO and before its most profitable digital advertising products. The company argues that the low valuation was given due to the risk associated with the overseas expansion.
“Facebook Ireland and Facebook’s other foreign affiliates - not Facebook US - led the high-risk, and ultimately successful, international effort to sell Facebook ads,” the company said in a pre-trial memorandum.
Follow on over to Reuters for more on the $9 billion lawsuit Facebook is currently facing.