Will Labour boycott Facebook?

Ben Chapman-Smith at NZ Herald reports:

Facebook’s “tiny” and “barely believable” tax bill this year makes a mockery of New Zealand’s tax loopholes for multinationals, says the Labour Party.

In a statement entitled “Facebook’s tiny tax bill demands action from Dunne”, Labour’s Revenue spokesperson David Clark said the social media site’s New Zealand arm paid a mere $14,497 last year.

Its tax bill in the 2010 financial year was an even smaller $5238, he said.

“For a company that has 2.2 million users in New Zealand and makes billions worldwide, that’s barely believable.”

Sigh – I thought Labour got the Internet. the Internet does not have boundaries. If NZ advertisers choose to advertise on Facebook, that does not mean Facebook pays tax in New Zealand. Just as if a US client pays me for market research in the United States, I pay tax in New Zealand not the US.

But hey if Labour really thinks that Facebook is a tax evader, then they could just boycott it in protest!

The reality is we are in a world where global Internet companies will of course locate in low tax countries. That is one of the reasons who we should have globally competitive tax rates – both companies and individuals are highly mobile in today’s world.

New Zealand can pass as many laws as we want, but we can’t force global companies to register in New Zealand as taxpayers just because they have NZ customers. What would we do – ban Google and Facebook from being accessible in New Zealand because their advertising revenues are not taxed here?

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