👉 Background: Meta Platforms is the OG social media giant that still dominates our screens here in Australia - we’re talking Instagram, Whatsapp and Facebook. Despite the fact that Facebook is pretty much used exclusively for birthday reminders and Marketplace, it still reaches 78% of Aussies aged over 16.

‍👉 What happened: While Whatsapp and Instagram don’t lodge financial accounts in Australia, Facebook does. Now, Facebook’s Australian revenue for 2024 has been released. It jumped by $110 million in 2024 to $1.46 billion. But, surprise surprise, most of this revenue that was earned in Australia wasn’t recognised here.

‍👉 What else: In fact, Meta sent $1.25 billion of its Australian revenue to other Meta subsidiaries to reduce its taxes - a classic transfer pricing strategy.

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‍What's the key learning?

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‍💡Transfer pricing is a technique used by big global companies to shift profits from higher-tax countries to lower-tax ones. Global companies like Meta set up subsidiaries in low-tax countries like Ireland where the corporate tax rate is 12.5% — compare that to Australia’s 30% tax for large corporates.

💡When Facebook books revenue in higher-tax countries like Australia, they are often shifted offshore. As a result, the remaining revenue and profit in the local country is minimal... if anything at all. In fact, Meta paid just $44 million in income tax in Australia on its $1.46 billion of revenue.

💡We’ve seen a whole host of other multinationals use transfer pricing to do this switcheroo too —  from Netflix to Spotify and Amazon as well. That’s why more than 140 countries have now agreed to a new global minimum tax of 15% for big global companies.