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

 


Proposals to limit excessive non-resident tax deductions


Hon Peter Dunne
Minister of Revenue

Monday, 14 January 2013 Media Statement

Proposals to limit excessive non-resident tax deductions

Proposals in an Inland Revenue officials’ issues paper released today would bolster the taxation of highly leveraged investments made by foreigners, through changes to the thin capitalisation rules, Revenue Minister Peter Dunne said.

“I referred in December to upcoming proposals for strengthening New Zealand’s tax laws and I am pleased to see these now released,” he said.

The thin capitalisation rules are intended to prevent non-residents from using excessive interest costs to reduce their tax liabilities, but have not been effective in all cases.

The issues paper proposes a number of measures to beef up the rules.

The first of the two major proposals is to extend the rules to non-residents who act together to operate businesses in New Zealand; the rules currently apply only if a single non-resident controls the business.

The second proposal is to disregard some shareholder debt when calculating the global indebtedness of the foreign investor. At the moment this debt can be included and used to justify a high level of indebtedness in New Zealand which can then be used to offset tax liability.

Mr Dunne said the two proposals would modernise the rules to reflect changes in global investment structures.

“In particular, they recognise the growing role of private equity investors, who often have high interest costs but are not subject to the thin capitalisation rules in their current form,” he said.

“New Zealand has overhauled its international tax system since 2007 by removing barriers to overseas investment by New Zealanders.

“The issues paper shifts the focus to investment in New Zealand by non-residents, and proposes changes to limit excessive tax deductions for interest costs. I think that would be a fairer outcome” he said.

The proposed changes are expected to leave most foreign investors unaffected as they are already subject to the thin capitalisation rules and have relatively low levels of debt.

They have also been designed to limit any effects on investors who use third-party debt, such as debt from an unrelated bank.

“The tax laws relating to foreign investment are a delicate balancing act. We want to ensure that a fair amount of tax is paid, but do not want to discourage investment,” Mr Dunne said.

“On the other hand, the proposals in this paper represent one step more towards ensuring that non-resident investors pay their fair share of tax,” he said.

Submissions on the issues paper, which can be found at www.taxpolicy.ird.govt.nz, close on 15 February, 2013.

ENDS

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Werewolf: John Pilger, And Making War On China

In July, the New Zealand Defence Force is scheduled to join the latest round of Talisman Sabre, a huge training exercise that Australia carries out biennially in conjunction with all four arms of the US military.

Last time around in 2015, New Zealand contributed 650 personnel, 45 vehicles and two of our $NZ771 million dollar fleet of NH90 helicopters to this regional war game.

What’s weird is that Talisman Sabre is actually a rehearsal for an assault on China and its ability to defend itself. More>>

ALSO:

 
 

Urban Planning Report: Momentum Grows To Replace The RMA

A major new report from the Productivity Commission lays the foundation for action on the growing political consensus that the Resource Management Act and associated laws are failing both cities and the natural environment and need a complete rewrite. More>>

ALSO:

Vaping: Quitline Supports Decision To Legalise Nicotine E-Cigarettes

Today Associate Minister of Health, Hon Nicky Wagner has announced that Government are taking the proactive step of legalising nicotine e-cigarettes, a move which Quitline is pleased to hear and support wholeheartedly. More>>

ALSO:

Gordon Campbell: On The Labour/Greens Deal (And The NZDF)

If Labour and the Greens were hoping their Budget Responsibility Rules (BRR) agreement would foster an unlikely alliance then hey… mission accomplished! Because it isn’t every day that Sue Bradford, the CTU and Matthew Hooton speak with one voice, as happened yesterday. More>>

ALSO:

Until After The Election: Extension Of Report-Back Date For Havelock North Inquiry

Attorney-General Christopher Finlayson announced today that the report-back date for the independent Inquiry into Havelock North Drinking-Water has been extended at the request of the Inquiry’s Panel. More>>

ALSO:

Little Heading For Court: Apology Over Donation/Hotel Contract Claims Not Accepted

Today I want to publicly apologise unreservedly to Mr Hagaman for any hurt, embarrassment or adverse reflection on his reputation which may have resulted from my various media statements. I have offered that apology to the Hagamans. More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news