New report: How the global tech giants avoid paying tax in New Zealand

And how we can counter this trend

Summary:

• A new report reveals multinational tech giants are generating billions of dollars of revenue in New Zealand but paying tiny amounts of tax

• They do so largely by claiming that most of this revenue was actually generated by overseas subsidiaries in low-tax countries

• There are various ways to combat this tax avoidance, including greater transparency and more assertive enforcement of existing laws

So much revenue, so little tax

Tech giants like Facebook are shifting as much as 95% of their New Zealand revenue offshore and paying almost no tax as a result, a new report reveals.

A digital services tax, which could have tackled this avoidance, was recently ditched by the government following US pressure. But, the report argues, simply enforcing existing rules could be just as effective.

The report, Big Tech Little Tax, was written for Tax Justice Aotearoa by Nick Miller, an international tax specialist who previously worked for both New Zealand’s Inland Revenue and Britain’s Revenue and Customs. It outlines how the tech giants – including Facebook, Microsoft, Oracle, Google and Amazon Web Services – avoid their tax responsibilities here.

In 2024, the New Zealand subsidiaries of those five firms earned $3.2bn in revenue from selling services to Kiwis. Yet they paid just $25m – or 0.78% – of that revenue in local taxes.

Although tax is normally levied on profits not revenue, this is still a startlingly low amount. Even an ordinarily profitable company could be expected to pay 2-3 times as much tax – and these are extraordinarily profitable firms. So what is going on?