Latest / Best of Business / Edward Miller: Centre for International Corporate Tax Accountability and Research expert reveals how much tax Netflix pays in NZ

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Edward Miller: Centre for International Corporate Tax Accountability and Research expert reveals how much tax Netflix pays in NZ · Best of Business

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  Speaker 1: You're listening to a podcast from Newstalk ZEDB. Follow this
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  Speaker 2: Now Netflix. There are questions about the global streaming giant
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  Speaker 2: and how much tax it is actually paying here in
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  Speaker 2: New Zealand. We've got one point three million Netflix users
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  Speaker 2: in New Zealand paying at least eighteen dollars fifty a
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  Speaker 2: month each. The company apparently doesn't meet the eleven million
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  Speaker 2: revenue threshold to make finances public, which would indicate a
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  Speaker 2: small tax bill. Edward Miller is a researcher at the
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  Speaker 2: Center for International Corporate Tax Accountability. He's would me this
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  Speaker 2: evening high.
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  Speaker 3: Edward Childer, great to be with you.
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  Speaker 2: So how much do they make here? Do we know?
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  Speaker 3: No, we don't know that information. If you look at
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  Speaker 3: what Netflix files in Australia, their their filings say that
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  Speaker 3: they earn a revenue of one point one five billion
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  Speaker 3: dollars in Australia, but in New Zealand the revenue that
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  Speaker 3: they earn here is less than eleven million dollars, which
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  Speaker 3: basically means what appears to mean that the revenue is
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  Speaker 3: being booked in another jurisdiction, not in New Zealand.
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  Speaker 2: How do you do that? How do you book your
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  Speaker 2: revenue elsewhere?
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  Speaker 1: Legally?
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  Speaker 3: It's a great question and one that should be should
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  Speaker 3: be sitting in front of the IRD because if they
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  Speaker 3: can't do it in Australia, then why can they do
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  Speaker 3: it here? The Australian Tax Office has had a more
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  Speaker 3: muscular approach to investigating multinationals. So it might be that
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  Speaker 3: Netflix feels that they can't get away with as much
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  Speaker 3: in Australia as they can here under the IRD. But
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  Speaker 3: if you're a Netflix user in New Zealand, you're paying
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  Speaker 3: for a service that's being delivered in New Zealand, it's
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  Speaker 3: being consumed in New Zealand. I think it's the fair
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  Speaker 3: thing to be asking why is the revenue being booked
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  Speaker 3: in what appears to be another jurisdiction.
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  Speaker 2: I've been this is authorities and other districtions like Europe.
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  Speaker 2: They've been raiding Netflix offices in Paris and they've been
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  Speaker 2: doing it in Amsterdam. What exactly are they investigating them
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  Speaker 2: full there?
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  Speaker 3: So that investigation they raided the powers in Amsterdam officers
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  Speaker 3: because what happened in the French filings is that Netflix
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  Speaker 3: revenue jumped from very little to a lot in subsequent years.
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  Speaker 3: So they are investigating subsequent years of which in Netflix
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  Speaker 3: appears to be booking revenue that had been earned in
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  Speaker 3: France from French Netflix users in the Netherlands. And that's
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  Speaker 3: my suspicion that what is happening in France is probably
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  Speaker 3: very similar to what's happening here because the parent company
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  Speaker 3: of the New Zealand Netflix subsidiary is the same company
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  Speaker 3: in Netflix International dv I see incorporated in the Netherlands.
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  Speaker 2: Right, given that our government is looking at corporate tax
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  Speaker 2: rate here in New Zealand and particularly as it relates
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  Speaker 2: to multinationals, trying to get them to come here, et cetera,
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  Speaker 2: is this related to that? I mean, is this something
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  Speaker 2: that we should be looked partly looking at alongside a
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  Speaker 2: change to our corporate tax right?
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  Speaker 3: I think it's a great wake up, Paul Ryan for
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  Speaker 3: us to start thinking about what the relationships are about
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  Speaker 3: services being delivered in New Zealand, about revenue being booked
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  Speaker 3: in New Zealand or otherwise, and about whether we can
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  Speaker 3: tax that revenue, whether it's being derived from New Zealand
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  Speaker 3: or otherwise. I don't think we have enough information to
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  Speaker 3: be able to make a clear call that we can
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  Speaker 3: confidently say that we can cut the corporate tax right
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  Speaker 3: because it appears that foreign multinationals have lots of tools
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  Speaker 3: at their disposal to be able to shift profits that
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  Speaker 3: are earned in New Zealand to other jurisdictions where they
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  Speaker 3: are taxed it will lower rate.
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  Speaker 2: How did you start Why did you start looking into
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  Speaker 2: this to do with Netflix in particular and New Zealand.
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  Speaker 2: What kind of got you into it?
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  Speaker 3: I saw these stories coming out from Front or from
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  Speaker 3: at Front and Amsterdam, and I thought that's interesting. I'm
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  Speaker 3: just going to search in the company's register and see
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  Speaker 3: what the ownership relations of the Netflix subsidiary here, and
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  Speaker 3: that's when I saw that it was the exact same company,
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  Speaker 3: and I thought, oh, there's a story here. I took
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  Speaker 3: a look at the Australian filings because I could get those,
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  Speaker 3: and I tried to take a look at the New
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  Speaker 3: Zealand filings and they simply weren't there. And if you
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  Speaker 3: sort of do some basic back of the envelope calculations,
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  Speaker 3: you know you were talking about one point three million
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  Speaker 3: subscribers paying eighteen fifty. I mean some of those will
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  Speaker 3: be paying seven fifty because they're sort of the piggybacks
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  Speaker 3: I can use of subscribers. But any way you slice
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  Speaker 3: up the apple into the number of subscribers on them
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  Speaker 3: out they're paying. You're looking at hundreds of millions of
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  Speaker 3: dollars of revenue that should be being booked in New Zealand,
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  Speaker 3: which is definitely more than the eleven million dollar threshold
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  Speaker 3: that foreign owned companies are required to report at. So
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  Speaker 3: I started looking at that and then trying to look
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  Speaker 3: at the Dutch filings and the British filings and get
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  Speaker 3: a sense of what's happening in the company. I don't
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  Speaker 3: have the sin of advanswers, but it seems very clear
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  Speaker 3: that the revenue of Netflix subscribers that being consumed here
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  Speaker 3: in New Zealand as not being booked here in New Zealand.
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  Speaker 3: And I think it's a cause for concern. And as
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  Speaker 3: you say, in terms of the international investment position, it
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  Speaker 3: seems that there's no clear relationship that exists around the
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  Speaker 3: economic activity that's taking place here and the tax revenues
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  Speaker 3: that's being booked here, and that we need to zoom
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  Speaker 3: out us some more questions and start to think about
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  Speaker 3: whether we need more transparency about these things before we
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  Speaker 3: go and cut the corporate tax.
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  Speaker 2: Edward, thank you very much for that. Edward Miller, who's
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  Speaker 2: a researcher at the Center for International Corporate Tax and
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  Speaker 2: Accountability Research, who's had a look at a little look
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  Speaker 2: into Netflix. I mean, obviously you don't really know, and
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  Speaker 2: what you don't know, what you don't know, right, but
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  Speaker 2: less than an eleven million dollars in revenue. No one's
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  Speaker 2: buying that, are they?
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