Facebook records $10m loss on Australia Taxation Offic bill
SYDNEY: Facebook’s Australian business burned through $10 million in 2017 after settling unpaid back taxes with the Australian Taxation Office.
Facebook’s accounts for its local business were filed yesterday as were Google’s which confirmed its total business in Australia surpassed $3 billion for the first time last year.
The accounts highlight the ongoing strength in the Australian businesses of the two members of the so-called digital duopoly, amid concerns about their dominance of the digital advertising market.
The also suggest a changing relationship with the ATO, following Senate enquires, and federal legislation designed to curb multinational corporate tax minimisation.
Facebook’s accounts show its revenue in Australia soared to 32 per cent to $479 million in the 2017 calendar year. But the social media behemoth swung to a bottom line loss of $9.6 million in Australia last year, from a profit of $3 million a year earlier, after a one-off payment to the tax office.
The social media behemoth’s tax bill spiked to $42 million, up from $3.2 million in 2016. Most of the tax increase came from a one-off $31 million payment to the ATO following a previously undisclosed audit of the tax it paid between 2009 and 2016.
Excluding the one off tax settlement, Facebook made a profit of $33 million in Australia last year, and will still pay $9.9 million of corporate tax on that.
Facebook declined to comment further on the ATO payment and its corporate results.
Google, meanwhile voluntarily disclosed that its gross Australian advertising revenue was $3 billion in 2017. It paid about $2 billion of this back to Google parent entities in the form of licensing fees.
The results are the first since the search advertising giant restructured its Australian operations in 2016 following fierce criticism over its tax bill, and after the Federal government enacted legislation to claw back more tax from multinationals.
Net revenue in Australia in 2017 was $1.02 billion. The company booked a pretax profit of $149 million, and an corporate income tax expense for the year of $24 million. Its bottom line profit was $125 million.
“We invested more than $500 million in our Australian operations, and signed on to Australia’s Voluntary Tax Transparency Code (VTTC) for the 2018 financial year,” a spokesperson said in a statement.
Tech giants such as Facebook, Google and Apple have faced criticism in Australia and other countries for the amount of tax they pay relative to their size of their businesses, and for re-re-routing sales in some countries to jurisdictions where tax rates are lower.
Last year, the Federal Senate conducted into an inquiry into the taxes paid by tech companies and other multinationals.
Australia’s competition watchdog is conducting a separate inquiry over the digital giants dominance of advertising markets and the impact of that on traditional media.
And the Federal privacy commissioner recently said it would investigate Facebook after it confirmed as many as 310,000 Australians might have been affected by a data breach.