The corporate tax rate in the US is actually higher than in many EU countries. The reverse is actually true, US companies choosing to base their "head quarters" in Ireland and the Netherlands.
It's worse than that. The "HQ" is in Ireland, but pays "royalties" to an IP holding company in the Cayman Islands, which is where all the profits go, on which no tax is paid. This is the "double Irish" referred to in other comments.
A very important piece of information is left out of the article: what Facebook UK is paying in "license fees" to other parts of Facebook.
The accounts show £131m in "administrative expenses", of which I can account for £86m in staff costs from the same document. £35m of that is a "share based payments charge", which represents the accounting treatment of share options. Of course, the shares handed out are shares of the US parent and not the UK subsidiary.
As for Toyota, Japan has the second highest corporate tax rate in the first world, after the USA. And until two years ago, Japan had the highest rates.
So I don't think Toyota was running the same schemes we see in tax havens.
If (and I have no idea of this is true) Japan doesn't tax transfers from foreign subsidiaries to domestic parents, and the US allows transfers from domestic subsidiaries to foreign parents to be expensed, such an arrangement would avoid taxes entirely, making Japan's tax rates irrelevant.
So can some tax attorney (we used to have a few on here) or CPA/CA break down how exactly this happened and how other people with corporations can do similar things? If Apple isn't going to be paying their "fair share" (yeah, that's a contentious term I'm throwing around) might as well benefit from the money they spent on lobbying and do the same thing they're doing. I'm in that limbo region where Julius Baer won't approach me as a 25MM+ net-worth individual but I'd still like to minimize what I pay.
You need to have "intellectual property" of some sort (patents, brands for franchising, copyrighted software). You create a number of corporations - one that is tax resident in a tax haven like the Cayman Islands and domiciled in Ireland, one that is tax resident in Ireland, one in the Netherlands, and one in each country where you sell your goods or services.
You then go and hire a good tax accountant who has experience with the Double Irish tax dodge (look it up on Wikipedia), and Bob's your uncle. (Though a double irish is harder to create for new firms since 2015 - you might have to acquire a ready-made shell corporation.)
Of course all this only makes sense if you have profits in the tens or hundreds of millions, so that paying for the shell companies, your Irish headquarters, your tax accountants and your lawyers is cheaper than actually paying tax.
The part I don't understand is that the brand was developed in the US. Don't you have to transfer the IP at something approaching fair market value to the tax haven corporation? How could you possibly have the resources (in the haven, no less) to do this without loaning money (at interest?) backwards?
So if you sell something on the open market anywhere, you can't sell it to your foreign subsidiary or owner for too much more or less than the open market price. But things get dicey when you're talking IP: patents and trademarks don't trade on the open market but are absolutely vital for a subsidiary to be alive, right? Amazon isn't Amazon if it can't call itself "Amazon".
The other trick is to offer some kind of service that's difficult to precisely quantify like having an accounting or service center in one country that every foreign subsidiary is required to pay for. It might not be a reasonable price but the cost of auditing all the call center records to find out it's costing $3/minute (on average) for a particular US based company to outsource its support calls to somewhere instead of $0.10/minute is going to be very steep. Do this across a few different lines of corporate support and your profit hiding is accomplished.
Edit: note that you can just go and read the accounts for Facebook UK here: https://beta.companieshouse.gov.uk/company/06331310/filing-h...
A very important piece of information is left out of the article: what Facebook UK is paying in "license fees" to other parts of Facebook.
The accounts show £131m in "administrative expenses", of which I can account for £86m in staff costs from the same document. £35m of that is a "share based payments charge", which represents the accounting treatment of share options. Of course, the shares handed out are shares of the US parent and not the UK subsidiary.
131-86=£46m which isn't broken down further.