Google NZ posts another loss - and makes another tiny NZ tax contribution

Across the Tasman, hackles have been raised.

In a now familiar ritual, Google New Zealand has posted another loss, all but avoiding a local tax contribution.

Records just filed with the Companies Office show Google New Zealand lost $52,000 during its 2011 fiscal year - worse than the $45,000 loss it reported for 2010.

Revenue increased to $4.45 million from $3.98m in 2010.

Income tax expense is listed as $109,000, down from 2010's $203,000.

Other expenses that helped push the company into the red were led by marketing expenses of $3.03m, up on 2010's $2.60m.

So is Google New Zealand a basket case? 

Far from it.

The latest IAB/PwC figures show NZ online advertising spending in rude health - particularly the search and directory category where spending in the last quarter alone was $29.77 million.

Many surveys put Google's search engine share at around 90% in New Zealand.

And with Yellow forced to buy search words en masse to stay relevant (the company is said to be Google's largest NZ customer), the search giant is doing very well out of the directory market, too.

It's more a case that, like a number of multi-national technology companies, Google bills advertisements booked by New Zealanders to its operation in the tax haven of Ireland.

Analysts have estimated that Google's Australia-New Zealand operation, based in Sydney, clocked up around $A1.1 billion in revenue during 2011.

But booking search ads through Google Ireland has dramatically limited the US-based company's local tax liability.

For 2011, Google paid just $A74,176 tax across the Tasman.

And, as every year since the mid-2000s, it led to political outrage. 

This time, it's been opposition ICT spokesman Malcolm Turnbull whose accused Google, and companies like it, of eroding Australia's tax base.

The conservative politician said a coaltion government would seek to make companies like Google and Facebook pay more local tax.

Google spokesman Johnny Luu told NBR ONLINE his company had no comment on Mr Turnbull's claims.

In a separate statement, Google said it complies with the tax laws of every country in which it operates.

ICT Minister Amy Adams referred questions about Google NZ's tiny tax contribution to Finance Minister Bill English's office.

NBR has sought comment from Mr English, and Revenue Minister Peter Dunne.

Internationally, the heat is being turned up on tech companies.

Amazon is under investigation by British tax authorities for recording about £8 billion in revenue in Britain over three years without paying tax, according to a Guardian report.

And the New York Times has accused Apple of dodging billions in US taxes by billing from Nevada (where the company has no operations), routing routing profits through Irish subsidiaries and the Netherlands and then to the Caribbean to pay an effective tax rate of 9.8%.

10 comments
Login in or Register to view & post comments