Finance Minister Steven Joyce and Revenue Minister Judith Collins have released three consultation papers proposing new measures to strengthen New Zealand’s rules for taxing large multinationals.
“Our broad-based low rate tax system continues to perform very well for New Zealand overall,” Mr Joyce says. “However it’s important that it keeps evolving to ensure that all companies operating in New Zealand pay their fair share of tax.”
“The proposals in these documents are in line with the recommendations from the OECD’s base erosion and profit-shifting (BEPS) project which has developed best practice measures for the global response to BEPS.”
The consultation documents contain proposals for:Tackling concerns about multinationals booking profits from their New Zealand sales offshore, even though these sales are driven by New Zealand- based staff Preventing multinationals using interest payments to shift profits offshore, and Implementing New Zealand’s entrance into an international convention for aligning our double tax agreements with OECD recommendations.
“We also need to be mindful of the New Zealand context so the proposals address some specific BEPS arrangements that Inland Revenue has observed,” Ms Collins says.
“We welcome multinationals’ participation in our economy, but we also expect them to pay tax based on their actual levels of economic activity in New Zealand.”
Submissions on the consultation document on implementing the international convention are open until 7 April. Submissions on the other two are open until 18 April. Ministers will consider final proposals arising from the documents later in the year.
The consultation documents are available at www.taxpolicy.ird.govt.nz.