Facebook Japan fails to report $4.7M in income: Report

By Riyaz ul Khaliq

ANKARA (AA) - Social media giant Facebook has been put on notice in Japan for allegedly underreporting its income in the country, local media reported.

A report by daily Japan Today Thursday claimed that Facebook’s Japan unit “failed to declare about 500 million yen [$4.7 million] in taxable income over the two years through 2017”.

“The tech giant's advertisement revenues earned in Japan were paid to its branch in Ireland, where the corporate tax rate is lower, in an attempt to reduce taxable income at the Japan unit,” the report said.

Japan charges corporate tax at about 30% while it is more than half of it in Ireland at about 12.5%.

However, the report said that the social media giant with presence across the globe is “believed to have corrected its tax declaration and paid the additional levies” of over 100 million yen imposed by the Tokyo Regional Taxation Bureau.

"We are cooperating with taxation authorities to comply with legal regulations in each country," the Japan unit of Facebook is reported to have said.

“Regulators are stepping up scrutiny over tax-saving measures taken by digital hegemons such as Facebook, Apple Inc, Amazon.com Inc and Google LLC, including transferring locally derived revenues to a unit in a country with lower tax rates,” according to the daily.

“In the Facebook case, the Ireland office paid the Japan unit of Facebook remuneration equal to total expenses plus several percent commission for supporting its ad business in Japan,” it added.

Facebook runs a localized version in Japan since 2008 and it set up its local unit in the country a year later.

The report said that Facebook Inc’s Japan net profit for 2018 jumped to 219 million yen ($2.6 million) from 11 million yen ($103,550) in 2017.