I can't stop Meta. Neither can the ATO, ASIC or the ACCC

Peter Switzer
25 July 2024

The consumer watchdog is barking that the likes of Meta, owner of Facebook, is dodging tax but it can’t prove it. People ask me: How do these big US companies get away with this? Well, it starts with an old US law of life that says “anything is legal if 100 businessman say it is!”

The big tech companies such as Meta, Apple, Google, Microsoft, Intel and others have set up operations in Ireland, where the company tax rate is very low. This year, the Australian Computer Society informed us that “Microsoft, which took $6.3 billion from Australian customers during fiscal 2021-22, told the ATO that 93.6 per cent of that was not taxable – ultimately paying just $120.28 million, for an effective tax rate of 1.9 per cent of gross profits.”

The AFR’s Sam Buckingham-Jones has looked at Meta’s argument for its low tax bill and a spokeswoman from the company came up with the following: “Tax is just one part of the equation, and we are proud of the economic activity that Meta generates directly through our own investments and through the thousands of Australian businesses that have grown on our platforms.” That’s like a parent saying how proud they are that their child can drive faster than most drivers, after they’ve smashed the car!

Interestingly, the Australian Competition and Consumer Commission (ACCC) says it’s hard to work out how well Meta’s Facebook and Instagram works out for advertisers, “because it was difficult to verify how accurate their claims were”.

The consumer regulator (ACCC) wants the Government to change laws to make what these big companies do and what they generate in revenue and profit to be more transparent, and the Australian Tax Office (ATO) would support that.

What about the businesses and consumers that lose money to the likes of Meta because they permit scams to exist and flourish on their social media platforms? This week, one of my financial planning clients informed me that he saw I was ‘advertising’ stock tip deals on Facebook, which had nothing to do with me or my business.

This is about the fourth time it has happened since early May, and despite the ACCC and ASIC representing me to stop this happening, it’s still going on! Given I personally don’t spend money with Facebook, how hard would it be for Meta in a high-tech world to stop any ad that uses the words — “Peter Switzer”?

I’m sure if Mark Zuckerberg was continuously and consistently maligned on Facebook, it would get stopped. I have to wonder if the Meta spokeswoman is proud of the scamming that happens in that “equation” she talked about?

And I wonder if she’s proud of the fact that Meta is pulling out of the News Media Bargaining Code a law that compelled Facebook and Google to negotiate commercial deals with news publishers in 2021 for using their content to attract customers’ eyes, ears and business!

In contrast, at least Google is playing fair, with Buckingham-Jones reporting that it “has been quietly renewing its agreements.”

In 2023, Facebook Australia reported revenue of $209 million with a net profit of $47.1 million. Undoubtedly, the ACCC sees this like the scary fairytale Hansel and Gretel. But for Australia, there’s no happy ending.

On those revenue numbers, Guzman y Gomez and their 30 stores generate three and a half times more revenue!
How do they get away with it? Try these bananas:
1. Expensive lawyers and big accounting firms protect them.
2. In 2019, Reuters reported that then President Donald Trump came up with this when Italy was trying to impose a digital tax on big tech companies: Trump “…believes this is an unfair discrimination on U.S. companies since they are the primary companies that would be affected by such a tax,” the official said. “If such targeting of U.S. companies is done, he would have no choice but to retaliate to protect U.S. businesses.”
3. Scared politicians.
4. It’s called transfer pricing, where the head office in Ireland does work for the Australian branch but they over-charge, over-service and effectively smuggle profit out of Australia as costs, which becomes profit in the Irish headquarters.
There’s another big pay off because the Irish company tax rate is 12.5%, while ours is 30%.
A guy I know who’s building his business in the US said there are gangster companies out there making it hard for him. Now I’m starting to see what he means.

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