Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

IRD to get increased powers to extract info

IRD to get increased powers to extract info from multinationals under new tax law

By Paul McBeth

Dec. 13 (BusinessDesk) - New Zealand's Inland Revenue Department will get tougher powers to demand overseas information from uncooperative multinational companies under a new law aimed at discouraging complicated tax structures to unfairly minimise a firm's tax obligation.

The Taxation (Neutralising Base Erosion and Profit Shifting) Bill passed its first reading in Parliament yesterday after a false start when Revenue Minister Stuart Nash missed his cue to deliver the government's speech to the legislation.

The new law would adopt a number of measures developed to stifle the ability of large global firms to use base erosion and profit shifting (BEPS) strategies to reduce their tax bill. It is part of a global push being championed by the Organisation for Economic Cooperation and Development. The OECD has estimated global losses through tax avoidance amount to US$240 billion a year.

The legislation would also give IRD greater teeth in demanding information from multinational firms held overseas, which commentary on the bill says is "difficult or impossible for Inland Revenue to obtain" and "can allow a multinational to stymie an Inland Revenue investigation through non-cooperation, particularly through withholding the information required by Inland Revenue to perform the investigation."

Labour Party MP Kiripatu Allan, who sits on the finance and expenditure committee examining the bill, noted the increase in power during her speech to the House, saying uncooperative multinationals have "really been an issue for IRD, and I think that we expect to hear substantive submissions on that in the finance and expenditure committee."

Under the proposed law, multinational firms would face fines of up to $100,000 for failing to comply with a request for information, compared to current sanctions of just $4,000 for not providing information or up to $25,000 for knowingly not providing it. The legislative change would also let the tax department make an assessment based on the information it has to hand and prevent the taxpayer from admitting the requested information as evidence in a dispute or court proceeding.

MPs largely focused on Google, Facebook and Apple when criticising the complex tax structures, although none of those companies' local units say they're being audited in their respective financial statements lodged with the Companies Office.

Labour's Michael Wood, the finance and expenditure committee chair, ended up reading the minister's speech, saying the bill aims "to address a source of unfairness in the tax system" which was a key tenet of the government's plans to overhaul the broader tax system.

"A broad, low-based system relies on everyone paying their fair share, and we cannot allow a situation to carry on in which a small number of multinational companies shirk that obligation," Wood said. "This won't necessarily be the only set of measures that this government undertakes in pursuit of that objective, but it is an important set of measures."

(BusinessDesk)

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Gita Hits NZ: 'It Was Literally Like A Wall Of Water'

"We were looking at the river at 80 cubic metres at about 4pm thinking it was amazing that we'd dodged the bullet ... an hour and a half later it was 600 cubic metres, and it just kept going up to 900 from there." More>>

ALSO:

Closing Or Selling Regionals: Fairfax Starts NZ Endgame

Fairfax Media Group will close or sell 35 percent of its New Zealand print titles as the Australian group pursues a digital strategy for the kiwi unit, now rebranded Stuff. More>>

Fletcher Building: Norris Steps Down As Chair After New $486M Loss Provision

Ralph Norris will step down as chairman of Fletcher Building after the company took a further $486 million provision for project losses at its Building + Interiors unit and said 14 of the unit's 73 projects, worth $2.3 billion, are loss-making or 'on watch'. More>>

ALSO:

WWF: Concerns With Suggestion To “Scrap” Fishing Monitoring

“Our Pacific neighbours, like Fiji and the Solomon Islands, are making this work with far less economic resources than New Zealand. There’s no reason the government can’t get this done by October.” More>>

ALSO: