Google's NZ tax bill remains modest

Stephanie Davis, head of Google New Zealand. Photo / Getty Images.

The New Zealand subsidiary of internet giant Google paid $356,124 in New Zealand income taxes last year.

In formal accounts to December 31 2016, the company recorded revenues of $12.6m, up from $10.7m the year earlier.

The company's structuring sees its New Zealand subsidiary earn only a "service fee" from parent company Alphabet in return for providing marketing services.

New Zealand companies paying Google for advertising are typically invoiced from related companies based in low-tax Singapore or Ireland.

An investigation last year into the online advertising market found Google and Facebook - who run a similar setup - likely respectively earned $400m and $100m in advertising revenues from sales to local client.

In a statement accompanying the accounts a spokesman for the company said they paid US$4.7b in taxes globally.

"Google complies with the tax laws in every country where we operate. We agree everyone would benefit from a simpler, more transparent system and believe international forums are the right places to have those conversations," the spokesman said.

The tax arrangements of multinational companies - particularly internet firms whose "weightless" operations allow them to easily relocate economic activity around the globe - has become a hot topic internationally in recent years.

New Zealand Government reforms intended to crack down on profit-shifting by multinational companies, expected to haul in $100m annually, have explicitly warned problems of capturing tax revenue from online economic activity are unresolved.