Google pays $227,074 of tax in New Zealand

Google Inc is paying more tax in New Zealand than previously but its $227,074 tax bill in 2013 isn’t likely to stress a company with US$15.42 billion of revenue globally in the quarter ended March 31, 2014.

The Labour Party has been pushing the issue of the tiny amount of tax being collected from multi-national companies, targeting Facebook in particular. Revenue spokesman David Clark has argued the government should have the power to ban websites if multi-nationals making money from them don’t pay much tax locally.

Google’s global accounts show a 19 per cent increase in revenue in the first quarter compared to the first quarter of 2013.

The accounts for Google New Zealand for the year to December 31, 2013 filed to the Companies Office show revenues of $10.13 million, up 49 per cent from the $6.8 million in 2012. That's more than twice the 21 percent increase in total online advertising across New Zealand last year to $471 million, according to Advertising Standards Authority figures.

Search was easily the single largest category in that $471 million online ad spend, and Google holds an estimated 90% of the search market. However, like Facebook and others, it bills much of its bookings from NZ and other countries to its subsidiary in Ireland to take advantage of the country's lower corporate tax rate.

The bulk of the revenue is from the provision of services, with $1,919 of interest income, and is unlikely to reflect the ultimate parent Google's advertising sales in New Zealand.

The income tax expense of $227,074 for 2013 is up from $165,526 the previous year and it reduced pre-tax income of $166,685 to a loss of $60,389 for the year.

Accountants have said international tax treaties are not coping with global digital businesses.

The Google New Zealand accounts have $2.3 million of service fees to the parent and $7.8 million of fees to other related parties.

The breakdown of expenses shows employee expenses of $3.9 million, down from $4.2 million last year and advertising and promotional expenses of $1.3 million, up massively from $253,449 last year.

(BusinessDesk)