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Tax Bill Progresses Despite Treaty Concerns

A taxation bill has completed its second reading with general support despite Labour raising concerns about it ratifying a treaty MPs had yet to see.

Labour’s David Clark said it was wrong the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill was empowering the ratification of an inter-governmental agreement yet to be finalised. the bill contained matters

The Government has been negotiating an inter-governmental agreement called FACTA (the Foreign Account Tax Compliance Act) which requires reports on any New Zealand citizens deemed by the USA to be “persons” of interest to them for financial reporting purposes, including those born in the USA who have not lived as adult citizens there.

Clark said it was most unusual for Parliament to ratify a treaty which MPs had not seen yet.

The United States bases its tax law on citizenship not residency, which makes matters complicated for those born in the US, but who are resident overseas.

FATCA will require financial institutions in all countries to provide information to the US tax authorities about the accounts of their customers who are US taxpayers. To reduce the compliance costs of FATCA for New Zealand financial institutions, the Government is currently completing an inter-governmental agreement with the USA.

National’s Paul Goldsmith said a number of people had raised concerns about the FACTA agreement, but it was about cross-border tax collection and tax evasion. Not enforcing it would damage New Zealand’s reputation, he said.

National’s Todd McClay said the omnibus bill would ensure the tax system was fit for purpose and the Government welcomed been amendments by the select committee around the taxation treatment of employer provided housing, uniforms and other matters.

The Greens said they opposed the bill because it gave tax breaks to the oil industry.

The bill completed its second reading by 105 to 15 with Greens and Mana opposed.

MPs then began the third reading of the Food Bill.

Earlier, the second reading of the the Local Government Act 2002 Amendment Bill (No 3) was completed by 95 to 25 with Greens NZ First and Maori Party opposed.

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