Meta’s Irish jig allowing it to cut Australian tax bills
Social giant in spotlight for $262m sent overseas
Facebook owner Meta takes more than $262m a year in tax funding from health, education and aged care by shifting money reaped from Aussie ads to Ireland, experts say.
“Facebook is slapping Australians in the face with its egregious and aggressive tax dodging,” Jason Ward, the principal analyst at the Centre for International Corporate Tax Accountability and Research, said.
Facebook Australia’s most recent financial accounts show that in 2022 it received $1.25bn from Australian businesses that advertised on the social media platform and immediately sent $1.03bn to another member of the Meta group as payment for “advertising inventory”.
The company that received the cash, Meta Platforms Ireland, soaks up revenue from Meta subsidiaries around the world and pays tax on its profit at the Irish rate of 12.5 per cent – less than half Australia’s corporate rate of 30 per cent.
Mr Ward said the move may be legal but it took away “funding for essential services like public health, aged care and education”.
“How can honest Australian businesses compete when multinationals are able to shift billions offshore?”
Mr Ward said his estimate that tax dodged was $262.4m was conservative.
The Irish jig helped slash the profit declared by Facebook Australia to just $77m before tax, reducing the local company’s tax paid to $31m, at the same time as boosting profits in Ireland, which the EU Tax Observatory says is the world’s second-biggest corporate tax haven.
Big companies move more than $US140bn ($A213bn) to the Emerald Isle every year in pursuit of advantages including the country’s low company tax rate, the think tank said in a global tax evasion report.
Australian Taxation Office data shows that Facebook Australia’s local profit margin is under 9 per cent – less than a third of the 30 per cent margin Meta enjoys as a global group.
“This discrepancy is potentially a huge red flag that one of the world’s largest corporations is dodging obligations,” Mr Ward said.
Irish company documents show Meta Platforms Ireland channels money it gets from territories including Australia into one of Meta’s key cashboxes, another Irish company called Facebook International Operations which receives billions of dollars a year but has no employees.
In the same year, 2022, as it received $1bn from Facebook Australia, Meta Platforms Ireland paid Facebook International Operations a dividend of euro 3.7bn ($A6.1bn).
Facebook International Operations in turn paid a US company in the Meta group, Facebook International, $US2.4bn.
Mr Ward estimates Mr Zuckerberg will receive US$700m ($A1bn) in dividends – about the same amount Facebook sent to Ireland tax-free back in 2022.
Former Australian Competition and Consumer Commission chair Allan Fels said Facebook and Google had sopped up much of the advertising spending that previously went to newspapers, radio or TV, causing “a serious decline” in the amount of public interest journalism that is produced.
“There are many parts of Australia where there is no local news coverage,” he said.
A spokesperson said the company “takes its tax obligations seriously and pays all taxes required in every country that we operate, including Australia”. “We have always paid income tax in accordance with Australia’s taxation laws, and in the last financial years at effective tax rates well above the statutory company income tax rate.”