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

'Tea Break Bill' Passes: Gordon Campbell On Bad Labour Laws And Poor Safety

By co-incidence, one of the prime dangers of the government’s new employment relations law has been underlined by the release of the death and injury statistics among workers at New Zealand ports. These are highly profitable enterprises for the port owners.

The Port of Tauranga for instance, is expecting its current full-year profit to be between $78 million and $83 million and other ports are enjoying similar boom times – but they are also highly dangerous places for the people who work on or around the port premises. At the Port of Tauranga, there have been 26 serious accidents since 2011, and two deaths. More>>

 

Parliament Today:

No Charges: Outcome Of Operation Clover Investigation

Police have completed a multi-agency investigation, Operation Clover, into the activities of a group calling themselves “The Roast Busters”. The 12 month enquiry focused on incidents involving allegations of sexual offending against a number of girls in the Waitemata Police district and wider Auckland area... More>>

ALSO:

UNICEF Report: NZ Cautioned On "Stagnating" Child Poverty

An international report by UNICEF has found that child poverty rates in New Zealand have barely changed since 2008, despite similar sized countries significantly reducing child poverty during the recent recession. More>>

ALSO:

Funding Report: Two Pathways For Transport In Auckland

Commissioned by Auckland Council, the group was asked to investigate two possible pathways for raising $300 million per year ($12 billion over 30 years) to pay for the improvements needed to help fix Auckland’s transport system. More>>

ALSO:

Pay Equity: Equal Pay Win In Court Of Appeal

CTU: The Court of Appeal has made a historic decision paving the way for a substantial equal pay claim for aged care workers. More>>

ALSO:

Gordon Campbell: On The TPP Finishing Line, And Amazon’s Woes

If the Trans Pacific Partnership trade deal wasn’t such a serious matter, this would be pretty funny… More>>

ALSO:

TV3 Video: Three Die On Roads Over Labour Weekend

The official holiday period ended at 6am Tuesday, with three deaths on the roads during the Labour Day weekend. More>>

Employment Relations Bill: Govt Strains To Get Tea Break Law Through

The Government has been left with egg on its face - failing to get its much-vaunted, but hugely unpopular, meal break law passed in the first week of its new term, Labour spokesperson on Labour Issues Andrew Little says. More>>

ALSO:

Guns: Police Association Call To Arm Police Full Time

"The new minister gave his view, that Police do not need to be armed, while standing on the forecourt of parliament. The dark irony was that the interview followed immediately after breaking news of a gunman running amok in the Canadian parliament in Ottawa..." More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news