Microsoft NZ reports surge in revenue and profit after 2019 tax settlement

Microsoft NZ reports surge in revenue and profit after 2019 tax settlement

Microsoft NZ's post tax settlement financial position becomes clearer

Credit: Rob O'Neill

After paying the taxman $24.7 million in a settlement last year, Microsoft's New Zealand business has reported bumper revenue for 2020.

Revenue increased from $463.2 million in 2019 to $627 million for the year to 30 June while the company's bottom line lifted from a $3.8 million loss after the tax settlement to a $27.2 million profit.

Excluding the settlement, Microsoft NZ paid $8 million in tax in 2019 compared with $8.5 million this year. The company's tax charge in 2018 was $7.2 million, but after various adjustments it wrote a cheque for $5.1 million.

Last year, Microsoft settled a long running audit into what is called transfer pricing, the way cost of sales are recognised and valued between Microsoft New Zealand and the company's other entities offshore.

Cost of sales increased in line with revenues, from $357 million in 2019 to $510 million in 2020. Other expenses were broadly in line with those reported in 2019.

The filing also reference Microsoft's plan to build a local datacentre region, in northern and western Auckland. At the date of signing the accounts, Microsoft had committed $39.1 million to the project on behalf of a new local company, Microsoft 6399 NZ Ltd.

The accounts further reveal Microsoft NZ bought Open Cloud NZ from MetaSwitch Networks, for $49.9 million.

Open Cloud provides the telco industry with real time application servers for agile development and deployment.

Microsoft bought UK-based MetaSwitch in May, ostensibly to help it realise its ambition to allow telecommunications carriers manage 5G networks on its cloud instead of on traditional hardware.

Microsoft New Zealand's ultimate owner is the US corporation through its sole shareholder MBH Ltd, which is based in Bermuda.

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