A major Herald investigation has found the 20 multinational companies most aggressive in shifting profits out of New Zealand.
The Herald’s analysis compared tax paid and profitability margins (the ratio of pre-tax incomes to revenues) of multinational corporations with their New Zealand subsidiaries.
Using Deloitte’s top-200 list of New Zealand biggest firms as a starting point, augmented with the addition of subsidiaries of the worlds’ largest listed companies and high-profile players from offshore debates about the subject, the Herald identified 103 local companies whose performance could be directly compared with the audited accounts of their listed parent.
The process was laborious, involving collecting more than 500 annual and financial reports – many comprising hundreds of pages – with each having to be read in order for the required numbers to be plucked out from statements of consolidated income.
Companies who reported particularly unusual results, typically from business sales or write-downs were excluded, while multinationals whose New Zealand operations were split across several subsidiaries had their domestic results combined.
The dataset fails to capture income from New Zealand directly booked by offshore firms. For instance Facebook New Zealand’s reported revenues of $1.2m are clearly only a fraction of the sum kiwi businesses spend advertising on the worlds’ largest online platform.
It also discounts the New Zealand operations of firm owned offshore but not by listed companies as audited information about their profitability is readily available. This means outfits such as salmon and forestry conglomerate Oregon Group, owned privately by Malaysia’s billionaire Tiong family, escapes capture.
Despite these caveats, and the group being non-comprehensive, the Herald dataset nevertheless captures a surprisingly large chunk of the economy. The 103 companies recorded $67b in annual revenues, accounting for 30 per cent of New Zealand’s gross domestic product, and the dataset appears to be one of the most comprehensive of its kind.
Parliamentary written questions to Inland Revenue about whether authorities had an estimate as to the scale of, or tax paid by, multinational companies in New Zealand was answered by revenue minister Michael Woodhouse.
“I am advised that Inland Revenue does not hold information in a way that enables it to readily identify multinational companies. I am therefore unable to provide the figures requested.”
Data visualisation by Harkanwal Singh