“About 92% of [Google NZ] total revenue is paid as the service fee to Singapore,” says Tax Justice Aotearoa member Nick Miller, a former EY senior manager in Britain and senior investigator with Inland Revenue NZ.

Singapore’s corporate tax rate is 17% compared to New Zealand’s 28%.

Miller said Google Asia Pacific’s corporate tax rate could be “significantly lower if Google Asia Pacific qualifies for one of the concessionary rates available to regional headquarters companies”.

Net profit rises

Google NZ reported a 2025 net profit of $27.6m ($25.9m in 2024) after an income tax expense of $4.6m.

Google expanded its business during the year, including expansion of its Gemini AI products, but also raised pricing.

Google responds

A Google New Zealand spokeswoman said: “We continue to invest locally through infrastructure, community engagement and product launches, and work in co-operation with Inland Revenue to comply with New Zealand’s legislative requirements”.

A figure was not immediately supplied for the size of Google’s local investments.

The company has not built data centres in NZ but does utilise infrastructure built by third parties.

Service fee jumped from $85m to $511m in a year

With its 2019 result the tech giant fulfilled a 2018 pledge to book New Zealand revenue in NZ, where previously it had invoiced local business to subsidiaries in lower-tax Ireland or Singapore.

But at the same time, in-house service fee payments from Google to its United States parent ballooned from $85m in 2018 to $511m in 2019. They have continued to climb steadily since.

At the time, a Google NZ spokeswoman said the service fee had increased because of a “new operating model”, which was compliant with tax law.

The company did not supply a breakdown of the service fee or its “new operating model”.

Miller said that, in his opinion, Google changed its service fee model in reaction to a 2018 update to tax legislation that was designed to tighten rules around cross-border transactions as part of a broader OECD crackdown on so-called “profit-shifting”.

“Google’s operating return is in reality about 2.4% based on total revenues of $1.26b – the net revenue aggregated with the service fee,” Miller says.

Advocate says more tax could apply

Miller’s group contends that a large part of the service fees sent offshore by Google and its peers are likely to be in large part royalty payments – which it argues should be subject to withholding tax – because their businesses are driven by intellectual property.

None of the Big Tech firms have provided a service fee breakdown.

“The [Google NZ] payroll costs of $42m, including share-based payments, are not indicative of a basic reselling agent,” Miller says.

Tax Justice Aotearoa says tens of millions could be raised from individual multinationals, and hundreds of millions collectively, if Big Tech firms paid withholding tax on their service fees (assuming they were dominated by royalties).

Miller says the measure would outstrip the money that would be raised by the Digital Services Tax – or a flat 3% tax on Big Tech firm’s local revenue. A bill for a DST was introduced by Labour shortly before the 2023 election. It did not have time to pass and was dropped by the incoming National-led Government.

Legislation for Google and other platforms to pay for news (previously used for links and now expanded for AI summaries) has also been on the agenda, but is currently on hold.

Asked in a 2026 preview Q&A which competitor she most admired, TVNZ chief executive Jodi O’Donnell said: “Hats off to Google for once again managing to convince the Government to hit snooze on the Fair Digital News Bargaining Bill. Around $2b in Kiwi ad dollars packed their bags and jetted off to global tech platforms. Meanwhile, NZ news media continued to play by the rules.”

Google New Zealand is owned by the US-incorporated Google International, which is in turn controlled by Alphabet Inc.

Last month, Alphabet reported a 22% rise in first-quarter revenue to US$110b ($187b) and an 81% increase in net profit to US$62.2b as AI helped boost its search ad, cloud and data centre businesses.

The company declined an interview.

Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.