Facebook wants to hide its Australian earnings


blog It has become more or less the norm for global technology companies to minimise their Australian tax liability in a way that much of the local population finds at least mildly objectionable. Google does it. Apple does it. And it’s very likely that other global tech groups do it as well. The problem is such an issue — and the potentially lost taxes so large — that the Australian Taxation Office has announced it is specifically investigating eight major multinational technology companies on the issue. Well, perhaps the most arrogant of the bunch (surprise, surprise) has turned out to be social networking giant Facebook, which has filed a form arguing it doesn’t need to disclose its Australian earnings at all. The Financial Review reports (we recommend you click here for the full article):

“The exemption, signed by former Facebook Australia director Elisabeth Houston, argues the company does not need to file a financial report in Australia under a waiver available to foreign-owned companies that are “not part of a large group” — as defined as having more than 50 employees and revenues above $25 million a year.”

Riiight. Last time I checked, Facebook was a massive global company which was making close to US$8 billion in annual revenue. It’s extremely hard to argue that the Australian operation of the company is “not part of a large group” — to do so would be simply farcical. While I understand the company’s duty to its shareholders to ensure that it maximises its profits, it also has a responsibility to the Australian public to be a good corporate citizen. After all, Facebook is milking that Australian public for all its worth via advertisements on its addictive social networking platform. It’s just fair that it should give something back locally — and that means being honest and upfront about how much it earns here. That concept should be relatively easy to understand.

Image credit: Nobihaya, Creative Commons


  1. Facebook is not the problem. Nor is Google. Nor any other company using the laws to their advantage (see also minerals sector and various others using various “initiatives” to reduce their contribution to society through the tax they pay and the accountability for how little it is).

    The problem is in the law itself, and while there is enough vested interest there is little interest in hard reform on either side of politics to simplify and reduce loopholes (which may very well reduce labelled tax rates as opposed to average tax payed and level the playing field somewhat). That and there’s a rather large and prosperous industry in this country (accounting & law), like many developed nations, that depends on the complexity of the loopholes and structures for its existence.

    One of the biggest shifts that could be made would be something like Sweden, Norway & Finland’s open taxation policy – a policy in place for longer than Australia has been a Commonwealth.

    • Are you claiming that Facebook is correct, and that Facebook isn’t a large corporation earning more than 25 million dollars with more than 50 employees and is therefore exempt from the Australian Reporting Laws?

      They may not be liable for any tax, but they still have to comply with the law that says they must report Australian earnings.

      • Their argument is that they dont have 50 employees IN AUSTRALIA, so the reporting laws dont apply. The rules mean they have to meet both criteria before needing to report, so its $25m AND 50 employees.

        I dont know if they have any employees in Australia, and if so how many, but I wouldnt expect it to be a large number – less than 50 Aussie based staff is probably correct.

        It wouldnt take much to change the laws so it recognises multinationals (and it should be changed), but if its not worded that way right now, as ridiculous as it seems, they may have an argument.

        Personally I think hiding behind this loophole is far shadier than shifting profits with the double irish/dutch sandwich as its specifically designed to hide earnings that dont need to get reported elsewhere.

  2. For the purpose of the Class Order a ‘group’ comprises:
    1 the company in question (Facebook Australia)
    2 entities which control the company in question and which are incorporated or formed in Australia or carry on business in Australia
    3 any other entities controlled by any foreign company which controls the company in question, which are incorporated or formed in Australia or carry on business in Australia
    4 any entities which are controlled by the company in question or the other entities.

    As long as FB Aust can keep its gross assets below $12.5m and staff below 50 then it’s clear. It would probably have another entity employ the staff and rapidly pay it’s revenue out while not carrying significant debtors.

  3. The NSW government levies Land Tax under a system whereby the unimproved value of the land is valued (guesstimated) by another arm of the same government. Other state governments no doubt do the same. In many cases there are no comparable sales of unimproved land in the vicinity and even if there were, nearly all grounds of appeal have been eliminated by the relevant legislation.

    Couldn’t the federal government follow a similar approach to the vexed issue of mobile profits?

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