Tuesday 22 November 2016

Google tax, again

A few things to remember for the folks angry about how much tax Google pays in New Zealand:

  • Company tax is based on revenue less costs, not on revenue.
  • Google New Zealand's costs include substantial payments to its foreign parent that allows Google New Zealand access to the foreign parent's IP;
  • Imagine there were no Google NZ. Some NZ company is paying Google International for access to the adwords platform, and selling ads in NZ. What would they pay? Do you really think it would be less than Google NZ pays now?
  • There is always opportunity for fudging things in transfer payments. For all the bluster, I have seen zero analysis showing that the transfer pricing is set inappropriately.
  • Consider the value of all of the services that NZ gets from Google, for free. It is plausibly orders of magnitude higher than any potential tax take.
  • Google disappearing wouldn't fix newspapers. Newspapers have been screwed since TradeMe siphoned off classified revenues. Want to make that disappear too?

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