Meta Facing Tax Bill Potential A Value Of IDR 14 Trillion In Italy After An Investigation

JAKARTA - Facebook's parent company, Meta Platform Inc., faces a potential tax bill of around 870 million euros (Rp14 trillion) in Italy after prosecutors began an investigation into the company. This was revealed according to two sources who had direct knowledge of the matter on Wednesday, February 22.

The investigation was opened by Milan prosecutors at the request of the European General Prosecutor's Office (EPPO), which asked Guardia police in Finanza and the Italian Tax Administration to examine whether there was a case for registration of users to be taxed.

"We strongly disagree with the idea that granting access to online platforms to users should be subject to VAT," a Meta spokesperson said in a written statement sent to Reuters.

The spokesperson added that the company is paying attention to its tax obligations, paying off all the taxes required in the countries where Meta operates, and will fully cooperate with the authorities.

The EPPO, based in Luxembourg, said it had not commented on the ongoing investigation, and would not publicly confirm what cases it was working on. News of an administrative tax audit of Meta was first published Wednesday by the Italian daily Il Fatto Quotidiano.

Both sources said investigators believed that free membership on the Meta platform was based on access to user data and should be classified as a service exchange, therefore subject to a VAT sales tax.

According to these sources, Italian tax police and revenue agencies calculate a model in which Meta will have to pay around 220 million euros in the VAT sales tax in Italy in 2021. The figure for the period back to 2015 is calculated at 870 million euros.

One of the sources explains that the most relevant point is the establishment of links between free access and data transfer as taxed transactions, which could impact other multinational companies and other countries in Europe.

A third source told Reuters that Meta believes there is no direct link between the data provided by the user and the access provided to the platform, and without this link, no VAT has to be paid.

An assessment by Italian authorities has been submitted to Meta and dialogue is ongoing between the company and the revenue agency, according to the sources.

The company may decide to accept the results of the investigation and pay the requested amount, or file an administrative dispute.

In recent years, Milan's Prosecutor's Office has opened several tax investigations into multinational tech companies such as Google and Apple.

Usually, once a payment agreement is reached, criminal investigations are closed.