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Kiwi tax probe squeezed $25m out of Microsoft – now it's Oracle's turn

New Zealand's Inland Revenue Department has questions about transfer pricing

A week after Microsoft paid just under NZ$25m (£12.41m/ $16.93m) to New Zealand's Inland Revenue Department in a dispute over transfer pricing, Oracle has revealed it is also under investigation.

Oracle said in its annual accounts that it received a statement of position from the nation's tax inspectors in April – basically, a document setting out tax owed – and was still in discussions. The dispute is over transfer pricing – how payments are made within international companies. Oracle New Zealand is owned by an Oracle subsidiary in Ireland.

The accounts from Oracle state: "In April 2019, the company was issued with a statement of position from the Inland Revenue Department (IRD) in respect of historic transfer pricing arrangements. In June, the Company responded to the statement of position stating its disagreement with IRD. The Company remains in discussions with the IRD in relations [sic] to these matters. Based on advice from professional tax advisors... the Group's current treatment of this matter is deemed appropriate and in compliance with taxation laws."

The database giant made local sales of NZ$145m in the year, up from $138m in 2018, income of another NZ$1m from sources other than contracts with customers, a profit before tax of NZ$2.3m and made a loan to another entity in the group of just over NZ$45m.

New Zealand's tax authorities promised to go after more than a dozen large technology companies it believes have been exploiting transfer pricing allowances to avoid tax. Microsoft agreed to pay just under NZ$25m to end an audit of its transfer arrangements.

Global software company accounts were already fiendishly complex but licensing and cloud arrangements have made tax inspectors' job even more difficult.

Oracle's Kiwi accounts are available here.

Its full-year group accounts recorded revenues of $39.5bn and net income of $11.1bn. ®

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