The tech giant settled a long-running dispute with the tax office in 2017 for $31 million – here’s part of what PwC argued on Facebook’s behalf.
Facebook considered restructuring its local team as a media agency to pay less tax in Australia as part of a long-running – and since settled – dispute with the Australian Taxation Office.show that tax partners from PwC working for Facebook, now known as Meta, commissioned external research to support its case against the ATO.
“After discussion, PwC instructed … that a reasonable solution would be to compare the agreement between Facebook Australia and Facebook Ireland to that between a media buying agency and its client in the Australian market,” the report said.Facebook Australia’s role, the argument went, was comparable to a media agency buying and placing ads – in this case, the Australian entity was representing Facebook Ireland.
It was clear to the third-party consultants that Facebook was making an unusual argument. “We have carefully considered a ‘best possible fit’ approach when building a comparable model for assessment, acknowledging that a ‘precise fit’ is not achievable, given the fact that Facebook Australia is not a media buying agency”, the authors wrote.Nevertheless, the consultancy calculated Facebook Australia would have made $3.8 million in profit between 2009 and 2013 using the media agency model.