eBay has made a huge decision to bring back as much as $9.7 Billion that had been designated as permanently invested overseas. As eBay made this decision, they had to pay tax on the difference between the United States and foreign tax rates. The tax to bring foreign held cash back to the United States: a staggering $3 billion. Moving the money back to the United States diminished eBay’s First Quarter.
At the end of 2013, eBay announced it has $12.8 billion in cash and investments with $9.7 billion held overseas. Because of this lucrative tax charge to eBay, they are reporting a $2.33 billion first-quarter loss. eBay made a major decision relocating capital to the United States in pursuit of financial growth and new acquisitions. Finance insiders predict Second Quarter revenues of $4 Billion. eBays sister company PayPal continues to draw new users which is helping the situation.
eBay has been working on redesigning their business model. A new focus on memorabilia and other rare goods has been taken into serious consideration. eBay also wants to incorporate well-known brands and a “fixed pricing” structure. The $2.33 billion loss may only be a small hiccup that proves to be the right long term decision. Only time will tell if this was the right move by the online e-commerce mogul.
Subscribe to TaxConnections Blog
Enter your email address to subscribe to this blog and receive notifications of new posts by email.