Labour revenue spokesperson David Clark says the internet company Facebook has 2.5 million customers in New Zealand but paid just over $14,000 to Inland Revenue last year, while Google paid just 2% tax on its earnings.
Mr Clark says the companies appear to be using what's known as the "double Irish" tax technique, using low-taxed Irish-based companies to funnel revenue and expenses.
He says while Australia and Europe are clamping down on the loophole, Revenue Minister Peter Dunne describes it as legitimate tax avoidance.
Mr Clark says New Zealand is getting a reputation as a see-no-evil tax haven, and the loophole is also putting local companies at a competitive disadvantage.
