Facebook to Pay More Than $110 Million in Back Taxes in France

France has said the big tech groups pay too little tax in the country where they have significant sales.

By Reuters | Updated: 25 August 2020 13:15 IST

Facebook to Pay More Than $110 Million in Back Taxes in France

Facebook has said big tech groups pay too little tax in the country where they have significant sales

Highlights

FB's French subsidiary to pay more than EUR 100 million in back taxes
Facebook said big tech groups pay small tax in countries of big sales
This includes a penalty after a ten-year audit by French tax authorities

Facebook's French subsidiary has agreed to pay more than EUR 100 million (roughly Rs. 877 crores) in back taxes, including a penalty, after a ten-year audit of its accounts by French tax authorities, the company said on Monday.

France, which is pushing hard to overhaul international tax rules on digital companies such as Facebook, Alphabet's Google, Apple and Amazon, has said the big tech groups pay too little tax in the country where they have significant sales.

Current international tax rules legally allow companies to funnel sales generated in local markets in Europe to their regional headquarters.

Some of the tech companies, including Facebook, have European or international headquarters based in countries with comparatively low corporate tax rates, such as Ireland.

A Facebook spokesman said French tax authorities carried out an audit on Facebook's accounts over 2009-2018 period, which resulted in an agreement by the subsidiary to pay a total EUR 106 million (roughly Rs. 930 crores).

The Facebook spokesman did not elaborate further on the details of the agreement. France's tax administration also did not give more details.

Facebook's spokesman also said that since 2018 the company had decided to include its advertising sales in France in its annual accounts covering France. As a result, Facebook's total net revenue almost doubled in 2019 from a year earlier to EUR 747 million (roughly Rs. 6,559 crores), a copy of Facebook France's 2019 annual accounts, filed with France's companies registry and seen by Reuters, showed.

Facebook France, which employs 208 people, refers to the French tax audit report in its 2019 annual accounts, saying it amounted to a tax adjustment of about EUR 105 million (roughly Rs. 922 crores).

This includes a penalty of about EUR 22 million (roughly Rs. 193 crores), the annual accounts showed.French magazine Capital was first to report the payment of back taxes. Facebook's spokesman said that the company paid EUR 8.5 million (roughly Rs. 74.6 crores) of income taxes in 2019 in France, an increase of almost 50 percent from a year earlier.

"We take our tax obligations seriously, pay the taxes we owe in all markets where we operate and work closely with tax authorities around the world to make sure we abide by all applicable tax laws and resolve any litigation,"

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