It appears that Facebook has managed to turn its billion dollar profit margin in 2012 into a staggering tax refund of $429 million. Facebook appears to have gotten its huge tax break through the use of deductions for the costs of share awards and executive stock options. According to US tax laws, these are the same as cash compensation for executives.
Bloomberg noted that Facebook stated in its report to shareholders that it had a $559 million tax liability. However, in the footnotes of the reports, we learn that the liability was offset by a $1 billion excess tax benefit for the stock options.
In its 2012 taxes, Facebook had a $451 refund for taxes that it paid prior. Facebook is planning to carry forward $2 billion in net operating losses that will keep its tax bill near zero for the future years as well.
Interestingly, Facebook’s 2012 and future tax reductions from stock options exercised that are related to its IPO will total nearly $3.2 billion. This is almost exactly what many experts predicted last year when Facebook announced its IPO.
You can bet that the new tax revelations will help to fuel the growing back lash against the tech sector’s skill at minimizing taxes paid. It also strikes some as odd that one of the biggest tech firms in the United States is paying less in taxes than many low wage workers in the US.
Of course, to be fair to the social media monster, many US corporations manage to pay very little in taxes, such as General Electric and Wells Fargo.
Meanwhile, Facebook is hard at work at figuring out to take more of YOUR hard earned dollars…., but some on Wall Street aren’t buying lately what Facebook is selling.