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Foreign investment in Aotearoa/New Zealand
Overseas Investment Office - February 2023 Decision
Another Microsoft Data Centre In Auckland
The Minister for Land Information and the Associate Minister of Finance have approved Microsoft 6399 New Zealand Limited United States of America (79.41%); United Kingdom (7.84%); Canada (2.86%); Norway (1.65%); Switzerland (1.38%); Various (6.86%) buying 6.5 hectares of sensitive land from Neil Construction Limited Malaysia (91%); Singapore (9%). Both the site of the land and the amount paid have been withheld.
The OIO's Decision Summary Background says: "Microsoft 6399 New Zealand Limited is a New Zealand registered company ultimately owned by Microsoft Corporation, an American multinational technology company with headquarters in Washington US. Microsoft Corporation develops, manufactures, licences, supports and sells computer software, consumer electronics, personal computers, and related services".
"Consent has been granted under the Benefit to New Zealand pathway for the Applicant to acquire a freehold interest in approximately 6.5 hectares of land at withheld (however at the time of publication, this acquisition remains conditional). The land is sensitive as it is non-urban land over five ha. The land is currently a vacant site, ready for development. The Applicant intends to construct a data centre on the land. The investment will support the two data centres currently under construction under the Applicant's previously consented significant business asset application".
"The investment will benefit New Zealand by introducing significant capital into New Zealand (including approximately $180 million of initial capital investment into this site), and by creating 50 new full time equivalent (FTE) jobs once the data centre on this site is operational plus 300 temporary FTE jobs during construction of the data centre on this site".
Linda Hill wrote up the original August 2020 OIO approval. "This consent involves several pieces of land in Auckland for the purposes of establishing a data centre for cloud computing and networking equipment, storing and processing large amounts of data. Microsoft intends improving its 'hyperscale cloud services' by creating an on-shore data region which will allow NZ organisations and agencies to keep data (including sensitive data on New Zealanders) in NZ to comply with regulatory requirements." The proposed data centre was announced by the Prime Minister in May 2020 (NZ Herald, 6/5/20).
"ITWire (7/10/20) reports that Microsoft can store data in New Zealand without it being subject to an onerous Australian 'encryption backdoor' law passed in 2018. In July 2018 the Government announced a new Cloud Software and Services Agreement with Microsoft, which simplified previous arrangements by treating all Government agencies as a single customer, and provided a transition path to cloud and hybrid deployments".
"Note that in November 2019 Inland Revenue released a Multinational Enterprises Compliance Focus 2019 report that touched on international discussions to ensure digital companies like Microsoft, Google, Apple etc. are paying a share of tax proportionate to the revenue in each of their customer countries".
Microsoft is not the only US digital behemoth planning on building a data centre or centres in NZ. In March 2022 the OIO approved Amazon Web Services to buy Auckland land to build a cluster of them. In 2021 the NZ Herald reported: "Last year (2020), Microsoft announced a plan to build three data centres in New Zealand and, with construction of the first under way at Westgate in northwest Auckland, is the first of the Big Three to break ground locally".
"Microsoft has not put a price on its build, but it did require Overseas Investment Office approval, putting it north of the agency's $100m threshold" (Chris Keall, 23/9/21).
Tax Dodging
Linda Hill (see above) touched on the question of attempting to ensure that Microsoft and the other digital giants pay their share of tax in the countries in which they operate, including NZ. Tax dodging on a heroic scale has been a long-running feature of these particular transnational corporations. Here is the relevant extract about Microsoft from a long article that I wrote for Watchdog 138 (April 2015, "Dodge City. The Transnationals' Favourite Place To Do Business").
"Microsoft denies a transfer of ownership of its New Zealand business from the United States to Luxembourg is related to the tiny European state's favourable tax policies. Luxembourg, which has a population of less than 600,000, has been accused of facilitating large-scale tax avoidance by multinationals".
"Microsoft New Zealand was owned by Microsoft Corp in Redmond until just before Christmas (2014), when its shareholding was transferred to Microsoft Luxembourg International Mobile, Companies Office records have revealed. Five days before the transfer, Britain's Guardian newspaper reported that Microsoft subsidiary Skype had been using two Luxembourg companies and an Irish subsidiary to 'circulate royalties and profits' in a manner that had allowed its Luxembourg-based entity to pay no corporation tax for five years".
"Microsoft responded to those claims by saying it followed the law in all the countries in which it operated. Microsoft New Zealand spokesman, Brendan Boughen, said the feedback he had received from the subsidiary's tax team, through its legal counsel, was that the transfer of ownership of Microsoft New Zealand to its business in Luxembourg was 'entirely unrelated to tax issues but was part of an internal restructuring of Microsoft's marketing subsidiaries'".
"The European Commission ruled this month (January 2015) that the tax treatment offered by Luxembourg to US technology giant Amazon was illegal and had allowed Amazon to operate almost tax-free in Europe. Luxembourg was the accounting home for about of a fifth of Amazon's $US74.6 billion annual revenues in 2013, Reuters reported. Organisation for Economic Cooperation and Development Tax Director, Pascal Saint-Amans, who is leading an unprecedented multilateral drive to close down multinational tax rorts, told Stuff in October (2014) that Luxembourg was coming under 'enormous pressure' to end some of its practices...
(Microsoft's) New Zealand subsidiary last reported a profit of $8.1 million on revenue of $78m in the year to June 2013, paying $3.9m in tax and a $7.3m dividend to its US parent" Press(, 29/1/15, "Microsoft NZ Denies Tax Avoidance", Tom Pullar-Strecker).
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