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Facebook draws in $713m in ad revenue but will only pay around $20m in tax

Facebook Australia has reported 2020 advertising revenue collected in Australia came to $712.66 million, up $3.2 million on 2019, however, only $155.34 million is taxable, down from $167.1 in 2019.

The gap in the revenue collected from advertising and the final tabled income is down to $559.02 million in “cost of sales – reseller expense” otherwise known as internal company costs. Facebook Australia is wholly owned by Facebook Global Holdings II, a US incorporated entity.

“The company acts as a reseller of advertising services to designated Australian customers through a reseller agreement with another group company and generates revenues primarily through resale of advertising inventory on Facebook,” stated the financial report.

Will Easton, Facebook Australia

“Advertiser reseller revenue comprises revenue from the display of impression-based ads in the contracted period in which the impressions are delivered.”

As a result of this internal payment, Facebook Australia’s tax bill for 2020 came to $20.190 million or roughly 3% of its overall ad revenue.

In response to this, a Facebook company spokesperson stated: “During the last financial years, we paid income taxes in Australia at effective tax rates well-above 30% and in accordance with local taxation laws. We take our tax obligations seriously and we are committed to supporting local communities and businesses in Australia.”

Facebook’s staff costs in Australia also rose significantly in 2020, compared to 2019, although no exact head count figures were available from the social media giant.

In 2019 “employee benefit expenses” were $55.1 million, compared to $67.24 million in 2020. This represents an increase of roughly 20% in staff costs.

However, during 2020 the global giant significantly cut its marketing and sales expenses in Australia, down to $8.28 million from $28.41 million in 2019, which equates to a drop in marketing spend of 70% between 2019 and 2020.

Facebook has recently signed a raft of commercial agreements with Australian news outlets to pay them for content that is to appear on Facebook News. None of these payments are reflected in the 2020 financial reports.

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