Facebook generated $712.7 million in revenue from advertising in Australia last year, yet only paid $20.2 million in taxes, new reports have revealed.
The social media giant reported that Aussie advertising sales were up 5.7 per cent from a year earlier, but used a sneaky loophole to avoid pay only 2.8 per cent tax.
How did they do it?
Facebook views its Australian business as a “reseller” of its advertising and will therefore charge the Australian business “reseller expense”.
This means the Australian business needs to pay the Californian parent company a fee. Last year the Australian business paid a $559 million fee for the $700 million revenue it made.
That $559 million is expensed by the Californian parent company, and the Australian business is left paying tax on only $153 million.
A spokesperson for Facebook told The Australian that the company had paid the correct tax.
“During the last financial years, we paid income taxes in Australia at effective tax rates well above 30 per cent and in accordance with local taxation laws,” she said.
“We take our tax obligations seriously and are committed to supporting local communities and businesses in Australia.”
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Tax avoidance taskforce
Last year, the taskforce successfully implemented the multinational anti-avoidance law (MAAL) with restructures that resulted in over $8 billion in additional taxable sales, an additional $850 million in GST paid and an estimated $80 million in business-to-consumer GST.
“We engaged with over 600 of the largest private groups. Of these, we completed 262 engagements with taxpayers who willingly adopt robust tax governance practices to manage and prevent tax risks,” the ATO said.
“There were 54 Top 500 groups with $7.35 billion tax assured across multiple years.”