Facebook could escape $14bn in US tax
The world's biggest social network could be entitled to a large tax deduction following its stock market flotation
SOCIAL NETWORKING SITE Facebook has acknowledged it could avoid paying $14bn (£8.7bn) is US corporation tax after it floated on the stock market last week, reports The Telegraph.
The world’s biggest social network will utilise a loophole in the US tax law, allowing it to claim a significant tax credit as its staff and early investors realise millions in share options following its listing on Nasdaq.
In its most recent filing to the US Securities and Exchange Commission, Facebook stated if all its shares are cashed in before the end of the year, a tax deduction would be triggered to the tune of “approximately $14bn”.
The social network is forecast to raise a minimum of $5bn, making it the largest Silicon Valley initial public offering in stock market history, with commentators expecting it to float on 18 May.
The company received its first endorsement over the weekend when Michael Pachter of Wedbush, a broker in Los Angeles, became the first analyst to recommend it.
He said: “More users should drive more usage, which in turn should drive increased advertising revenue share.”
The news comes as the company’s 28-year-old co-founder, Mark Zuckerburg, leads a series of meetings to attract potential investors for a listing that may place its value at $96bn.