Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search

 


Dunne explains NZ’s tax approach to multinationals


Hon Peter Dunne

Minister of Revenue


Tuesday, 4 December 2012 Media Statement

Dunne explains NZ’s tax approach to multinationals

Tax systems around the world are adjusting to corporate giants with huge internet footprints, but very little physical presence, Revenue Minister Peter said today in addressing issues around the tax treatment of large multinational companies.

“The reality is that tax regimes internationally have generally been developed for an industrial age, and have struggled to keep pace with new business models and technologies not contained by location or national borders,” Mr Dunne said.

“That is the challenge that we face in New Zealand, but it is very much a global issue faced by other nations too. The problem is not just that these large companies are not paying substantial tax here, but that they tend not to be paying substantial tax anywhere.

“We see Britain and Australia facing exactly the same issues, and our rules are already very similar to those adopted by Australia last week,” he said.

Mr Dunne said the answer to taxing multinationals appropriately in various jurisdictions would be found through international projects and agreements, and that New Zealand is involved in these talks, particularly through the OECD.

“A key issue is that foreign companies are taxed on the activities that they actually perform in New Zealand, so under international norms, New Zealand, like any other OECD nation, may have no right to tax profits from revenues generated from New Zealand.”

“Again, for cross-border transactions, the New Zealand tax system, like those of tax jurisdictions around the world, focuses on a physical presence and taxable activity occurring here,” Mr Dunne said.

“However, the internet has made it possible to provide an increasing range of services to distant customers from anywhere in the world. This means that overseas-based internet companies have a very limited physical presence in most countries in which they operate – including New Zealand.

“Since the bulk of what these companies do, in terms of programming, designing websites, running servers, selling advertising, is done overseas, New Zealand, like other countries, may have very limited taxing rights.

Mr Dunne said concerns that such multinationals are not paying appropriate levels of tax need to be balanced against those complex realities.

“There are no easy answers or quick fixes here, but there are definitely fundamental issues that need to be tackled to get a fairer system,” he said.

“This is, as I say, a global problem requiring a global response and New Zealand will be involved in working up that response,” he said.

He said New Zealand participates closely in the OECD project on profit shifting by multinationals and the global erosion of the corporate tax base.

“Part of the OECD’s work will focus on how tax structures such as the double Irish technique may be used to minimise the tax which is payable in Ireland and other foreign countries.

“We are also closely involved with related initiatives such as the systematic reviews of country regimes being undertaken by the Global Forum on Transparency and Exchange of Information for Tax Purposes and the OECD’s Forum on Harmful Tax Practices.

“I can assure you that any activities multinational businesses, or their New Zealand subsidiaries, perform in this country will be taxed appropriately,” he said.

Mr Dunne said on the international front measures such as transfer pricing, thin capitalisation, and general anti-avoidance rules are already in place to make sure international firms pay an appropriate level of tax in New Zealand.

“We also have a growing network of tax treaties to help stamp out tax avoidance through information sharing with other countries.”

As part of Budget 2010, the Government took steps to stop foreign multinationals from reducing their New Zealand profits through debt funding by tightening the thin capitalisation ratio from 75% to 60%. The Government’s tax policy work programme includes a project to ensure that certain investment structures cannot be used to escape the application of these rules.

Mr Dunne has requested a report from Inland Revenue into the tax treatment of such companies.

“Our tax laws need to evolve and they will. This is a challenge, and it is about fairness, and it will be met.”


Ends


© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Greens: Russel Norman To Stand Down As Co-Leader

Green Party Co-leader Dr Russel Norman has announced today that he will stand down as leader at the party’s Annual General Meeting in May. Dr Norman will remain as Co-leader and retain his finance and climate change portfolios until the AGM.

“After nearly a decade as Co-leader, now is a good time to find a new challenge for myself, and to spend more time with my family” said Dr Norman.

“This is my ninth year as Co-leader and I think it’s time for a change. Now is a good time for new leadership for the Party. My replacement will start from a strengthened base and will have a full parliamentary term to establish himself in the role and take the Greens into government in 2017." More>>

 

Gordon Campbell: On The Eleanor Catton Rumpus

If anyone was in doubt about the accuracy of the comments made in India by Eleanor Catton, the reaction from some quarters here at home has gone a long way to proving her point… More>>

ALSO:

More Rent Assistance, Less State-Owned Housing: John Key Speech - Next Steps In Social Housing

"We are going to ensure that more people get into social housing over the next three years, whether that is run by Housing New Zealand or a community provider. The social housing budget provides for around 62,000 income-related rent subsidies a year. We are committed to increasing that to around 65,000 subsidies by 2017/18, which will cost an extra $40 million a year." More>>

ALSO:

The Future Of Work: Andrew Little - State Of The Nation 2015

In 2005 when I led the EPMU we worked together with Air New Zealand to find a way to keep engineering jobs that were heading overseas. A lot of these workers were people I’d known for years and they were facing not just losing their jobs but not being able to find the kind of work they do without going overseas. A lot of people were facing personal and financial upheaval.... More>>

ALSO:

Gordon Campbell: On The Sabin Case, The Pressures On Greece And (Songs About) Coyotes

Mike Sabin is a National MP, and the current chairman of Parliament’s law and order committee. Yet reportedly, he is being investigated by the Police over an assault complaint... However, the PM will not comment on any aspect of the story. More>>

ALSO:

Houses, ISIS, King (& Catton): PM Post-Cabinet Press Conference

The Prime Minister met with reporters to discuss: • Social housing, the Auckland housing market • The prospect of joining international forces to combat ISIS • David Bain’s compensation • The lowering of the flag for the King of Saudi Arabia's death ... More>>

ALSO:

Gordon Campbell: On Tomorrow’s Speeches By John Key And Andrew Little

The Key government has already kicked off the political year on a stridently ideological note, with Environment Minister Nick Smith choosing to lay all manner of sins at the door of the RMA. Tomorrow, the government will wheeling out its best salesman – Prime Minister John Key – to sell its plans for state housing… . More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news