ATO Forces Facebook & Google To Back Pay Millions In Taxes

Australian 100 dollar notes in jeans pocket.

A crackdown on multinational tax avoidance has forced Facebook to pay $31 million in local taxes back to the Australian Taxation Office (ATO).

The fee covers Facebook’s presence in Australia from 2009 to 2015, however, may not be representative of the platform’s actual profits during those six years.

In 2017, Facebook reported a local tax bill of $11.2 million on a profit of $32.9 million, however in 2016, posted a pre-tax earning of only $6.3 million and paid $3.3 million in tax.

The drastic increase in – or more likely underreporting of – local revenue may be due to the platform having to be more transparent about revenue thanks to the ongoing probe into Facebook’s Australian division.

Google has also recently released its local accounts and profit, with the tech giant reporting a profit of $125.1 million in 2016 from its Australian arm.

Last year Google Australia earned roughly $3 billion in advertising while Facebook earned $479 million in ad spend revenue.

Both companies have been forced to simplify their tax structures as a way of becoming more transparent in the Australian market.

Google and Facebook may soon face tougher regulations depending on the ACCC’s submission into its ongoing digital platforms inquiry.

The ACCC called for submissions from Australian media outlets and publishers to determine if the likes of Facebook’s and Google’s algorithms had breached consumer protection laws in February.

The callout was part of its public inquiry into the impact of digital platforms on competition in media and advertising services, namely in relation to the supply of news and journalistic content.

The ACCC is also looking at the impact the likes of Google and Facebook are having on traditional Australian publishers and try and determine whether they can remain viable into the future.

In its report, the ACCC said it was concerned by “advanced algorithms to process user data” that deliver content that matches preferences is described as a possible “consumer protection concern”.

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