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

 

Labour's 'Future Of Work': Major Reform Of Careers And Apprenticeships

The next Labour Government will transform careers advice in high schools to ensure every student has a personalised career plan, Leader of the Opposition Andrew Little says. More>>

ALSO:

State Investments Management: Treasury Likes IRD, Not Education Or Corrections

The Inland Revenue Department has scored an 'A' in the first tranche of the Treasury's investor confidence rating for state agencies that manage significant Crown investments and assets, gaining greater autonomy as a result, while the Corrections and Education ministries gained a 'C' rating. More>>

ALSO:

Govt Goal: NZ To Be "Predator Free" By 2050

Prime Minister John Key has today announced the Government has adopted the goal of New Zealand becoming Predator Free by 2050... “That’s why we have adopted this goal. Our ambition is that by 2050 every single part of New Zealand will be completely free of rats, stoats and possums." More>>

ALSO:

Gordon Campbell: On The IOC’s Treatment Of Russian Sport, And Lone Wolf Terrorism

A blanket ban on Russian athletes would also have exposed the IOC to criticism that its treatment of Russia would have been marked contrast to its treatment say, of the track and field team from Kenya – a country about which the IOC has very similar doping concerns. More>>

ALSO:

Sounds Like A Plan: Auckland Council Receives Unitary Plan Recommendations

A key milestone in New Zealand planning history was reached today when the Independent Hearings Panel delivered the reports containing its recommendations on the Proposed Auckland Unitary Plan. More>>

ALSO:

National Park Expansion: Forests And Coast Of Kahurangi Protected

Five parcels of high value land totalling more than 890 hectares have been formally gazetted as part of the National Park. More>>

ALSO:

PPP Go-Ahead: SkyPath Gets Unanimous Support

Auckland’s SkyPath project has been given the go-ahead to be delivered through a public private partnership, after a unanimous decision at today’s Finance and Performance Committee. More>>

ALSO:

Gordon Campbell: On The Reserve Bank, The UN Shortlist, And Trump

Can there really be there any link between the US presidential elections and yesterday’s RBNZ signals on interest rates and the NZ dollar? Well, maybe. And it would be this: the improving US economy is reportedly putting a tailwind behind the US dollar, and rendering the actions of our Reserve Bank virtually irrelevant. More>>

ALSO:

Gordon Campbell: On What John Key Should Be Asking Joe Biden

No doubt, US Vice-President Joe Biden will be updating Prime Minister John Key on the chances of a TPP vote taking place in the ‘ lame duck’ session of Congress that’s held between the November’s election and the inauguration of a new President in January. More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news