Facebook Seeks Immunity from Disclosure of Earnings

Facebook Seeks Immunity from Disclosure of Earnings

5689 300x168 Facebook Seeks Immunity from Disclosure of Earnings The US social media giant Facebook Inc has sought immunity from corporate rules in Australia requiring companies to disclose their earnings while booking its local profits in Ireland. This comes amid mounting concerns over profit-shifting by international companies like Google, Apple and other non-tech global corporations.

The special exemption was signed by Elisabeth Houston, a former Facebook Australia director. It argues that the company does not need to present a financial report in Australia under a waiver set aside to foreign owned companies with more than 50 employees and revenues above $25 million per annum.

The US based company Facebook is one of the biggest companies in the world according to global financial reports. It is said to have a market capitalization of $169 billion and revenue exceeding $7 billion a year. It is also one of Australia’s top 10 advertising platforms.

The Facebook Australian operations are estimated by industry sources to be generating at least $60 million annually in revenue, whose main source is the advertising on the social network. Facebook on its part has however refused to disclose its Australian earnings. Neither has it divulged where it books its local revenue saying that they comply with all applicable laws.

Reports by advertisers to the Australasian Fairfax Media Limited indicate that they are billed by an Ireland-based subsidiary of Facebook with its European company headquarters is in Dublin, east coast of Ireland.

According to a legal expert from the University of Sydney Business School Antony Ting, the exemption of Facebook was an indication that the company used an intermediary or shell company to claim control over its local operations. This could also be used to lower its tax bill, he added.

Meanwhile, authorities from Australia have recently been vocal about tax issues in the nation. Tax commissioner Chris Jordan reaffirmed his commitment to tackling multinational tax evasion. He informed that his office is now actively sharing intelligence with five countries. It is currently investigating eight big companies involved with e-commerce, out of which three are under active tax audits.

The Australian Prime Minister, Tony Abbott on his first trip to the United States following his ascension to that office affirmed the government of his intent to lead global efforts to stop tax-avoidance by multinational firms stating that they need global tariff rules to ensure that businesses pay tax in the countries where they earn revenue.

Critics have observed that Australia alone cannot handle the issue of tax evasion in isolation. It will require international effort with involvement of the international corporations in question saying that profit-shifting by multinationals is a global and complex problem and can only be addressed by governments acting together through a body such as the G20.

Further analyses argue that given his part as the host to the G20 leaders’ summit in November this year, Abbott is in a strategic position to maintain the pressure on other nations to develop an effective international response.

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