New Zealand Herald, Auckland by Matt Nippert 23 Feb 2018
Government moves to crack down on tax avoidance by multinational firms are already bearing fruit, with Google telling Parliament it will no longer funnel New Zealand revenues into low-tax jurisdictions such as Singapore.
Revenue minister Stuart Nash welcomed the move and said he hoped it was a harbinger of things to come.
“Any organisation that decides to change its behaviour as a result of this legislation should be welcomed,” he said.
“Let’s hope it sets a precedent for the large multinationals who aggressively arrange their tax affairs in an attempt to avoid paying their fair share of tax.” Tax experts told the Business Herald the move was significant part of a broader restructuring of affairs by Google and other internet companies – but would not by themselves resolve thorny issues in international taxation that have vexed world and business leaders.
Auckland University law professor Craig Elliffe described the announcement as “a real breakthrough”.
“This is very, very interesting, and very positive. I think you do have to see it in the international context – Google will be dealing with this issue all around the world,” he said.
Google’s move comes after online rival Facebook announced a similar move in December.
Alphabet – Google’s parent like other internet companies, structured their affairs so contracts with customers in territories like New Zealand were settled in a low-tax jurisdiction such as Singapore or Ireland – meaning the customer’s government had no claim on any income tax revenue.
The practice saw Google’s New Zealand subsidiary provide only services as part of the sales process paying just $356,000 in tax on only $12.2m in revenue. Estimates of Google’s sales revenue from New Zealand range in the hundreds of millions of dollars annually.