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Google NZ pays $300k in tax, posts another $600k loss

Google NZ pays $300k in tax, posts another $600k loss

WELLINGTON: Google New Zealand paid $304,860 in tax last year as online advertising spending – in which it dominates the market – hit record levels in 2016, but has reported another $600,000 loss.

The global search engine’s New Zealand subsidiary earned revenue of $12.59 million for “services” to its parent company and Google Asia Pacific, but reported a loss of $603,755 for 2016, accounts filed with the New Zealand Companies Office show.

It reported a similar loss of $601,463 in 2015, on revenue of $10.7m.

Google is the dominant online advertising platform in New Zealand, and local businesses are believed to spend tens of millions of dollars a year on its advertising services and software.

Much of Google’s global revenue – which includes revenue from New Zealand – is funnelled through the company’s Irish subsidiary in order to reduce its tax bill, the BBC, Reuters and others have reported.

All of Google New Zealand’s revenue came from its parent or other subsidiaries by “providing services of research and development services and a service agreement with Google Asia Pacific for the provision of sales and marketing services”, the company’s annual accounts said.

Google’s largest expense was $7.7m in employee benefits, up 30 percent from 2015.

The company’s New Zealand loss came after a record year for online advertising in this country.

Interactive advertising spending – defined as advertising viewed on any screen via an internet connection – increased 11 percent in 2016 to $891m. Within that, spending on the search and directory advertising category reached $490.7m.

NZME and Fairfax New Zealand’s unsuccessful merger application last year estimated local advertising agencies spent about $67m on Google advertising in the 12 months to February 2016.