Google Inc. Pays Only $220K Tax in New Zealand Despite Earnings of $10M

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By Reissa Su | June 24, 2014 5:14 PM EST

Google Inc may be paying more taxes in New Zealand with a bill of $227,074 in 2013. However, according to reports, the Internet search giant has earned US$15.42 billion in global revenues in the first quarter of 2014. Comparing Google's tax bill in New Zealand and its total earnings, the amount the company paid to the government may be deemed not enough.

REUTERS/Andrew Kelly
The Google signage is seen at the company's offices in New York January 8, 2013. REUTERS/Andrew Kelly

New Zealand's Labour Party has moved on the issue of multinational companies paying a "tiny amount" of tax to New Zealand. Companies like Facebook, Google and Apple are some of the companies that appeared to pay a small amount of tax compared to their earnings worth billions.

According to revenue spokesman David Clark, the New Zealand government should be given the power to block Web sites if multinational companies earning money will pay little tax.

Reports said Google's global accounts indicated an increase of 19 per cent in revenue during the first quarter of 2014 compared to the first quarter of 2013. Google New Zealand reported revenues of $10.13 million for the year to December 31, 2013. Data from the Companies Office also showed an increase of 49 per cent in revenue from 6.8 million in 2012.

Advertising Standards Authority figures reveal that Google had twice the 21 per cent increase in total online advertising in New Zealand in 2013 at $471 million.

Previous reports said international tax treaties are not adapting to multinational digital businesses. Google New Zealand accounts have $2.3 million of service fees to the parent company and pay $7.8 million of fees to related parties. Reports said Google had spent $3.9 million on employee expenses and $1.3 million for promotional expenses.

Meanwhile, New Zealand tax officials have joined efforts to help the Organization for Economic Co-operation and Development (OECD) group of developed countries to multinational companies from profit shifting.

Revenue Minister Todd McClay said the first seven "deliverables" of the action plan developed by the OECD in 2013 were scheduled to be released in September in response to block global companies to resort to profit shifting to avoid paying high taxes.

McClay said in a statement that decisions made by OECD can affect the interpretation of tax treaties and allocation of taxes among nations. He said New Zealand is playing an active role in the discussions concerning the growth of the digital economy and its impact on tax bases.

McClay's announcement followed news of Google Inc reporting global revenues of US$15.42 billion. The company also said it had an after-tax loss of more than NZ$60,000 in New Zealand on revenues of $10.13 million. 

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(Photo: REUTERS/Andrew Kelly / )
The Google signage is seen at the company's offices in New York January 8, 2013. REUTERS/Andrew Kelly
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