Facebook's accounts, showing how it made $33.6 million in revenue during 2015 in Australia, have been called into question.
According to The Sydney Morning Herald, advertising insiders are disputing the 2015 calendar year figures which show how Facebook Australia's accounts revenue grew by 27% to hit the $33.6 million mark.
This revenue is set to rocket for 2016 as Facebook Australia no longer books its local revenue though it’s Ireland office. The accounts state Facebook Australia restructured to meet the government's multinational anti-avoidance legislation (MAAL) that took effect this year.
The MAAL was established to ensure that multinationals pay their fair share of tax on the profits earned in Australia. It is designed to counter the erosion of the Australian tax base by multinational entities using artificial and contrived arrangements to avoid the attribution of profits to a permanent establishment (PE) in Australia.
Among other things, the new law allows the Commissioner to double the maximum administrative penalties that can be applied to significant global entities that enter into tax avoidance and profit shifting schemes.
A business is a significant global entity if is a global parent entity with an annual global income of A$1 billion or more, or is a member of a group of consolidated entities for accounting purposes and one of the other group members is a global parent entity with an annual global income of A$1 billion or more.
Facebook Australia is now deemed as local re-seller and customers and no longer to have a contractual relationship with Facebook Ireland.
Facebook Australia originally did not file accounts in Australia because it argued that it was not part of a large group – defined as having more than 50 employees and revenues above $25 million a year.
Despite ad insiders questioning Facebook’s revenue model, Australia's strengthened anti-avoidance laws are said to be some of the toughest in the world.
In February this year laws which make digital products purchased overseas subject to GST were introduced to parliament, as the government looks to create a level playing field between Australian and overseas businesses. The laws, colloquially called the ‘Netflix Tax’, were introduced to parliament by Treasurer Scott Morrison.
Adding GST to overseas products like Netflix, games, movies and eBooks, is expected to raise $350 million over four years from July 2017.
Australia isn't the only country to be eyeing a 'Netflix Tax'. Parts of Europe and New Zealand have amended taxation laws to include digital products.
In December, the ATO’s move to make public its list of companies operating in Australia which failed to pay tax in 2013-14 was nothing short of fascinating.
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