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

Questions have been raised over how much tax Netflix is currently paying in New Zealand.

Research indicates there are over 1.3 million Netflix users in New Zealand paying at least $18.50 per month each.

However, new reports reveal the company apparently doesn't meet the $11 million revenue threshold to make finances public - indicating Netflix pays a smaller-than-expected tax bill.

Edward Miller, an expert from the Centre for International Corporate Tax Accountability and Research, says many Kiwi users are justified in wanting to learn more about what Netflix pays.

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Episode Transcript

Speaker 1 (00:00):
Now Netflix. There are questions about the global streaming giant
and how much tax it is actually paying here in
New Zealand. We've got one point three million Netflix users
in New Zealand paying at least eighteen dollars fifty a
month each. The company apparently doesn't make the eleven million
revenue threshold to make finances public, which would indicate a

(00:22):
small tax bill. Edward Miller is a researcher at the
Center for International Corporate Tax Accountability. He's with me this
evening high.

Speaker 2 (00:29):
Edward Childer, great to be with you.

Speaker 1 (00:31):
So how much do they make here? Do we know?

Speaker 2 (00:35):
No, we don't know that information. If you look at
what Netflix files in Australia, their filings say that they
earn a revenue of one point one five billion dollars
in Australia, but in New Zealand the revenue that they
earn here is less than eleven million dollars, which basically
means or appears to mean that the revenue is being

(00:58):
booked in another jurisdicod, not in New Zealand.

Speaker 1 (01:01):
How do you do that? How do you book your
revenue elsewhere? Legally?

Speaker 2 (01:06):
It's a great question and one that should be should
be sitting in front of the IRD because if they
can't do it in Australia, then why can they do
it here? The Australian Tax Office has had a more
muscular approach to investigating multinationals. So it might be that
Netflix feels that they can't get away with as much
in Australia as they can here under the IRD. But

(01:29):
if you're a Netflix user in New Zealand, you're paying
for a service that's being delivered in New Zealand. It's
being consumed in New Zealand. I think it's the fair
thing to be asking why is the revenue booked in
what appears to be another jurisdiction.

Speaker 1 (01:42):
I've been this is authorities and other districtions like Europe.
They've been raiding Netflix offices in Paris and they've been
doing it in Amsterdam. What exactly are they investigating them
for there?

Speaker 2 (01:53):
So that investigation they raided the Paris and Amsternam officers
because what happened in the French filings is that Netflix
revenue jumped from very little to a lot in subsequent years.
So they are investigating subsequent years of which in Netflix
appears to be booking revenue that had been earned in

(02:17):
France from French Netflix users in the Netherlands. And that's
my suspicion that what is happening in France is probably
very similar to what's happening here because the parent company
of the New Zealand Netflix subsidiary is the same company
Netflix International dB I see incorporated in the Netherlands.

Speaker 1 (02:37):
Right, given that our government is looking at corporate tax
rate here in New Zealand, and particularly as it relates
to multinationals, trying to get them to come here, et cetera,
is this related to that? I mean, is this something
that we should be potentially looking at alongside a change
to our corporate tax?

Speaker 2 (02:54):
Right? I think it's a great wake up, Paul Ryan
for us to start thinking about what the relationship are
about services being delivered in New Zealand, about revenue being
booked in New Zealand or otherwise, about whether we can
tax that revenue, whether it's being derived from New Zealand
or otherwise. I don't think we have enough information to
be able to make a clear call that we can

(03:15):
confidently say that we can cut the corporate tax right,
because it appears that foreign multinationals have lots of tools
at their disposal to be able to shift profits that
are earned in New Zealand to other jurisdictions where they
are taxed at a lower rate.

Speaker 1 (03:32):
How did you start Why did you start looking into
this to do with Netflix in particular and New Zealand.
What kind of got you into it?

Speaker 2 (03:40):
I saw these stories coming out from France or from
at Front and Amsterdam, and I thought, that's interesting. I'm
just going to search in the company's register and see
what the ownership relations of the Netflix subsidiary here, and
that's when I saw that it was the exact same company,
and I thought, oh, there's a story here. I took

(04:00):
a look at the Australian filings because I could get those,
and I tried to take a look at the New
Zealand filings and they simply weren't there. And if you
sort of do some basic back of the envelope calculations,
you know you were talking about one point three million
subscribers paying eighteen fifty. I mean some of those will
be paying seven fifty because they're sort of the piggybacks
that cand use of subscribers. But any way, you slice

(04:22):
up the apple into the number of subscribers on the
amount they're paying. You're looking at hundreds of millions of
dollars of revenue that should be being booked in New Zealand,
which is definitely more than the eleven million dollar threshold
that fig and owned companies are required to report at.
So I started looking at that and then trying to
look at the Dutch filings and the British filings and
get a sense of what's happening in the company. I

(04:45):
don't have the sine of ad answers, but it seems
very clear that the revenue of Netflix subscribers that being
consumed here in New Zealand is not being booked here
in New Zealand, and I think that's a cause for concern.
And as you say, in terms of the international investment position,
it seems that there's no clear relationship that exists around
the economic activity that's taking place here and the tax

(05:06):
revenue that's being booked here, and that we need to
zoom out us some more questions and start to think
about whether we need more transparency about these things before
we go and cut the corporate taxer.

Speaker 1 (05:17):
Ed would thank you very much for that. Edward Miller,
who's a research at the Center for International Corporate Tax
and Accountability Research. Who's had a look at a little
look into Netflix. I mean, obviously you don't really know,
and what you don't know, what you don't know? Right,
but less than an eleven million dollars in revenue. No
one's buying that, are they?

Speaker 2 (05:36):
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