He believed the problem could be solved within the existing law, by Inland Revenue scrutinising companies more rigorously.

His sentiment resonated with the Green Party co-leader Chlöe Swarbrick.

She asked Watts, during an appearance before the Finance and Expenditure Committee on Wednesday, whether he believed it was unfair the big tech companies were engaging in what appeared to be “tax minimisation, if not avoidance”.

Watts responded, “I don’t have a view on whether it’s fair or unfair. What I have a view on is, is it compliant with the law or not?”

Watts later said he was confident Inland Revenue was properly enforcing the law.

“I think it’s fair to say that those entities that are operating in an international area will be very aware of what the rules are.”

Watts said the challenge was tax rules varied from country to country and they were all trying to protect their tax bases.

Watts and the Commissioner for Inland Revenue Peter Merci said it made sense for New Zealand to work alongside other countries to figure out how much multinational companies paid in the various jurisdictions they operated in.

Swarbrick asked if Inland Revenue had investigated whether it should treat some of the service fees tech companies pay their parents as royalties and tax them accordingly, as per Tax Justice Aotearoa’s position.

Merci responded, “Those sorts of questions are questions that are very specific to individual cases.”

Inland Revenue deputy commissioner David Carrigan elaborated on the matter.

He recognised it was legitimate to ask whether a “service fee” was actually a taxable royalty.

He said an issue Inland Revenue was keenly focused on was whether service or licensing fees were set at the right levels.

“The real question for us is, is the price that’s being charged an arm’s length price? Is it one that a third party would pay in the market?” Carrigan said.

“That’s a transfer pricing question, and we’re pretty good at transfer pricing here in New Zealand.”

Miller, who used to work at Inland Revenue, questioned this, noting the service fees companies paid their parents (reducing their taxable profits in the process) looked “extremely high”.

For example, every year over the past five years, Google NZ paid services fees to an associated company in Singapore worth around 92% of its revenue.

This was despite its revenue increasing by 66% over this time to $1.3 billion in 2025.

Meanwhile, the tax it paid in New Zealand every year was in the single-digit millions.

Miller said Inland Revenue had the power to request more information from companies to better understand what their services fees were for, and whether they were actually taxable royalties.

The Government has been resourcing Inland Revenue to gather tax debt from Kiwis.

Miller said it should put more resources into investigating the big tech companies.

As a summation, Watts said, “I don’t care who you are … There is no safe harbour if you’re not complying with the law in regard to tax. Big or small, everyone is within the net, and my expectation is one of which we enforce the law equally.”

Jenée Tibshraeny is the Herald’s Wellington business editor, based in the parliamentary press gallery. She specialises in government and Reserve Bank policymaking, economics and banking.