How Much Tax Facebook Pays In Australia [Updated]

facebook ato taxImage: Getty Images

Facebook's head honcho Mark Zuckerberg has accepted Facebook might soon have to pay more tax globally. The social media giant's tax receipts in Australia in the past few years show it's barely making a dent.

Facebook's CEO Mark Zuckerberg spoke at the Munich Security Conference over the weekend and admitted the Organisation for Economic Co-operation and Development's (OECD) look at multinational tax avoidance might mean Facebook will have to bite the tax bullet, according to Reuters.

"I understand that there's frustration about how tech companies are taxed in Europe. We also want tax reform and I'm glad the OECD is looking at this," Zuckerberg is reportedly said in the speech.

"We want the OECD process to succeed so that we have a stable and reliable system going forward. And we accept that may mean we have to pay more tax and pay it in different places under a new framework."

Like Google and Amazon, Facebook books much of its profits in Ireland where the tax rates are far lower than other countries at 12.5 per cent. This means it can reduce its tax bill down to a smaller amount, shifting profits from countries with higher corporate tax rates, like Australia's 30 per cent rate.

In Australia, the site paid nearly $13 million — 30 per cent — during the 2017-8 financial year, according to documents from the Australian Tax Office (ATO). It paid a similar amount to the previous financial year despite earning nearly $150 million more due to a reduced taxable income.

FACEBOOK AUSTRALIA PTY LIMITED Overall income Taxable income Tax paid Tax rate
2017 - 2018 $479,897,834 $42,465,671 $12,739,701 29.99%
2016 - 2017 $331,366,976 $41,914,024 $12,574,207 30%

Interestingly, Facebook Australia's taxable income was only listed on the 2015/6 and 2016/7 Corporate Tax Transparency reports. When asked by Gizmodo Australia, the ATO declined to comment on Facebook Australia's specific

"The ATO cannot comment on the tax affairs of any individual or entity due to our obligations under the taxation secrecy laws," an ATO spokesperson told us.

"We have a legislative requirement to publish information about certain corporate tax entities annually through the Report of entity tax information (the report). The report uses information contained in tax returns and amendments requested by the relevant entity that have been processed before the reporting cut-off date."

It's understood that prior to January 2016, a number of major companies shifted profits booked and sold in Australia to other countries to avoid tax obligations. Since the introduction of Multinational Anti-Avoidance Law (MAAL), 44 major taxpayers, including Facebook and Google, have restructured their businesses in order to pay tax within Australia resulting in more than $7 billion in taxable sales.

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Some of the biggest tech companies in the world have been known to shift profits around to minimise the amount of tax paid. The Australian Taxation Office (ATO) just released a report for the 2017/8 financial year, and while most companies appeared to be paying the full corporate tax rate, others paid a lot less. Some even paid nothing.

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Dr Antony Ting, a tax evasion expert at University of Sydney, explained to us in December last year that paying a portion of their total income is common among multi-national enterprises (MNE) like Facebook and Google.

"Even though MNEs like Google and Facebook operate as global highly integrated enterprises, evidence revealed that their subsidiaries in Australia are reporting profit margins much lower than the group’s overall profit margins, and much of the group's profits are booked in low tax jurisdictions," Dr Antony Ting told us.

"The OECD is working on these issues, aiming to design tax policies to address these challenges, especially those arising from the digital economy."

As Facebook Australia responded to us at the time, it claimed it's working on solutions to provide more transparency regarding its revenue and where it earns it.

"We comply with applicable tax laws in every country we operate, including Australia, where we've voluntarily set up a sales and invoicing structure so that revenue from advertisers supported by our teams in each country is recorded in that country. We chose to make this change to provide more transparency into our revenue and pay more tax in Australia," a Facebook Australia spokesperson told Gizmodo Australia in December 2019.

"We understand that the [OECD] is currently working on possible tax solutions for an increasingly digitised economy to provide certainty for businesses to operate domestically and abroad. We continue to support multilateral approaches like that being undertaken at the OECD."

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