Meta says that Australia broke free trade rules by proposing a tech tax

Meta says that Australia is breaking US trade agreements by proposing a tech tax that would target big digital platforms.

After proposing a new tax on big tech companies that don’t make license deals with local media organizations, Meta said that Australia was breaking its free trade agreement with the US.

The company that owns Facebook and Instagram said the proposed tax would be “indefensible.” They also said it went beyond earlier taxes on digital services that had already caused trade problems with Washington.

Meta said that the plan to tax 2.25 percent of all Australian income for some platforms was against the terms of the US-Australia Free Trade Agreement.

The company claimed that the move treated American companies unfairly compared to domestic ones.

In a blog post, Meta said, “The tax clearly breaks the promises Australia and the US made in their bilateral Free Trade Agreement.” Australia agreed to treat American companies “no less favorable” than its own peers.”

On top of that, it said that the policy could lead to more trade actions, pointing out that the US government had responded to similar digital taxes in other countries.

The company also said, “We urge any government considering a similar approach to take a close look at what this model actually represents.”

The argument was about Australia’s “news bargaining incentive,” a rule meant to make sure that digital platforms support local journalism financially by giving money or sharing profits.

Australia’s government said it was still considering the plan and that any profits would go to the country’s news industry.

A spokesman for Assistant Treasurer Daniel Mulino said the government was still committed to the change, even though businesses were against it.

Since 2021, when Canberra passed a law requiring platforms to discuss payments with media organizations or face arbitration, the policy has been a source of disagreement between Meta and Australia.

As a result of the law, Meta briefly limited access to news in Australia. However, they later came to an agreement with several big publishers and stopped paying for news in 2024.

The changing rules have also impacted Google and TikTok. Some companies have said that the tax-based method is unfair and covers too many things.