Facebook and Google millions posted overseas

Facebook and Google have both posted record ad sales in Australia, while paying minimal tax.

Facebook paid less than $12m in tax in Australia for the year ending December 31, as it posted profits of $23.3m.

Facebook’s Australian arm sent close to half a billion dollars offshore last year, enablin­g the socia­l media giant’s local arm to pay tax on net profits of just over $20 million.

Google also paid a relative pittance in local taxes, despite reaping record Australian advertising sales, documents filed with the corporate regulator and obtaine­d by The Australian yesterday revealed.

Facebook’s Australian arm paid more than $450m last year to a related company overseas for “reseller expenses” — more than $70m more than a year earlier­ — though it was not clear if that was to Facebook’s Irish or Singapore offices, or another company entirely.

It meant Facebook paid less than $12m in tax in Australia for the year ending December 31, as it posted profits of $23.3m.

The social media giant’s Australia­n arm raked in $579.7m from advertising last year — plus a further $696,000 from what it calls “services” — but paid $454.9m in costs to an associated company offshore to arrive at a net revenu­e figure of $125.5m.

It was a record year for Facebook compared with a $9.6m loss a year ago. Its $11.8m tax bill is more than $30m less than what it paid a year earlier.

A Facebook spokesman told The Australian the company complied with applicable tax laws. “In 2018, the Australian Accounti­ng Standards Board implemented new account stand­ards for revenue recognition and our accounting has changed to reflect this,” he said.

Meanwhile, Google’s Australian operations posted revenues of more than $1 billion, including $560.6m worth of advertising and other reseller revenue, but recorded a pre-tax profit of $155m.

“In the 2018 calendar year, Google Australia made a pre-tax profit of $155.9m resulting in $49m of corporate income taxes payable, and invested almost $1bn in our Australian operation,” a spoke­woman said. Google is still being audited by the Australian Taxation Office­ and could end up paying more tax.

The ACCC, flagging a shakedown of the tech giants in its preliminary report late last year, said Google and Facebook’s business models “favour their own business interests” through market power and that a regulatory authority — either a new or existing one — should probe whether the tech giants are guilty of “discrimin­atory conduc­t”.

Both Facebook and Google were targeted in the government’s crackdown on multinationals, forcing them to move revenue previously held offshore into their Australian operation­s. However, the latest numbers will again raise questions about whether the tech giants are paying adequate tax in Australia.

In its quarterly results last week, Facebook’s head office set aside $US3bn for an expected fine from the US Federal Trade Commissio­n over privacy issues.

Additional reporting: AAP