The New Zealand Government is moving to close loopholes preventing large multinationals from claiming tax breaks which costs the country about $300million a year. <\/p>\n
At the International Fiscal Association Conference in Queenstown yesterday, Revenue Minister Judith Collins announced the release of three base erosion and profit-sharing (BEPS) consultation documents, aimed at strengthening New Zealands rules for taxing large offshore companies with a presence in New Zealand. <\/p>\n
BEPS is a tax avoidance strategy used by multinationals, where profits are shifted from jurisdictions with high taxes, for example the United States, to jurisdictions which had low taxes, or so-called tax havens. <\/p>\n
Mrs Collins told the Otago Daily Times yesterday the new measures were about fairness. <\/p>\n
\"One of the things that happens is that if youre an offshore company with an office in New Zealand ... they load on to the New Zealand company a lot of the cost of head office or ... they charge the New Zealand office for things, like very high interest rates,\" she said. <\/p>\n
\"They put a lot on the business in New Zealand. <\/p>\n
\"Profits they make in New Zealand are significantly reduced for tax purposes [and] profit is shifted offshore. <\/p>\n
\"Certainly, an amount of manipulation is allowed [but] were closing that loophole. Its just about fairness.Salary earners dont get a chance to do that, so why should anyone else?\" <\/p>\n
Included in the proposals was a new anti-avoidance rule to apply to large multinationals which structured to avoid having a permanent taxable, presence in New Zealand. <\/p>\n
A large multinational is considered a company with a global turnover of more than 750million ($NZ1.21billion). <\/p>\n
There were also plans to update existing transfer pricing legislation to align with OECDs new guidelines and Australias rules, as well as several administrative measures aimed at helping Inland Revenue (IRD) assess and collect the right amount of tax. <\/p>\n
Those measures would generally only apply to large multinationals which refused to co-operate with the IRD and would make it possible for IRD to assess the companies based on the information the department has at the time. <\/p>\n
That would also require tax to be paid earlier in the disputes process and allow IRD to collect relevant information held offshore. <\/p>\n
\"The proposed measures will also contain remedies for Inland Revenue where the non-resident does not co-operate, such as increased penalties and a power to allocate income to New Zealand in the absence of information to the contrary,\" Mrs Collins said. <\/p>\n
\"If the IRD does its job properly, we have money for hospitals ... schools ... the things people expect [the] Government to provide.\" <\/p>\n
New Zealand was not trying to be a world leader with the \"quite strong, but measured\" proposals. <\/p>\n
\"Were a very open economy, we rely on exports to survive, we need foreign capital as well. <\/p>\n
\"We need to not send out a message [that] we dont want multinationals. <\/p>\n
\"Were happy to have you as long as you pay your fair share of New Zealand-earned tax. <\/p>\n
\"Just because were nice, friendly little Kiwis, were not stupid.\" <\/p>\n
She expected legislation to be shored up and coming to parliament by mid-year once it became law it would be much more difficult for multinationals to find loopholes. <\/p>\n
\"Whatever measures we put in place there will be some very clever people in the world who will be hell-bent to get around this.\" <\/p>\n
tracey.roxburgh@odt.co.nz<\/a> <\/p>\n<\/p>\n Three consultation papers proposing new measures to strengthen New Zealands rules for taxing large multinationals were released yesterday. <\/p>\n They contain proposals for: <\/p>\n Tackling concerns about multinationals booking profits from their New Zealand sales offshore, even though their sales are driven by New Zealand staff. <\/p>\n Preventing multinationals using interest payments to shift profits offshore. <\/p>\n Implementing New Zealands entrance into an international convention for aligning our double tax agreements with OECD recommendations. <\/p>\n Submissions on the implementing the international convention are open until April 7, and submissions on the other two documents are open until April 18. Ministers will consider final proposals later this year. <\/p>\n<\/p>\n <\/p>\n Read the rest here:<\/p>\n Offshore tax loophole to be closed - Otago Daily Times<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" The New Zealand Government is moving to close loopholes preventing large multinationals from claiming tax breaks which costs the country about $300million a year. At the International Fiscal Association Conference in Queenstown yesterday, Revenue Minister Judith Collins announced the release of three base erosion and profit-sharing (BEPS) consultation documents, aimed at strengthening New Zealands rules for taxing large offshore companies with a presence in New Zealand. BEPS is a tax avoidance strategy used by multinationals, where profits are shifted from jurisdictions with high taxes, for example the United States, to jurisdictions which had low taxes, or so-called tax havens. Continue reading