New Zealand is on the right track on the issue of taxing large multinationals and is committed to working with the OECD and co-ordinating closely with Australia, Revenue Minister Peter Dunne said today in releasing an officials’ report on the issue.
“It is a problem facing many countries, but no one country can solve it alone. It is a global issue and it will have a global solution, and New Zealand is constructively working on being part of that solution,” Mr Dunne said.
He said New Zealand will have a representative at the OECD’s Committee of Fiscal Affairs meeting in Paris next month, where taxing multinationals will be an important agenda item.
“There is no doubt that more needs to be done, but I am satisfied that we are on the right track.”
The Inland Revenue and Treasury report examines concerns that large multinationals are paying little or no tax in the countries they operate in, such as New Zealand, as well as in their home countries.
Mr Dunne called for the report earlier this month.
“There is growing international outrage over this issue. People are offended that these large companies are often not paying any tax anywhere at all.
“The global community is saying this is not good enough and we are going to do something about it,” he said.
The report says that the issue can only be dealt with effectively as part of a global effort with other OECD nations. It also indicates areas within New Zealand’s domestic tax laws which may be further strengthened to protect the tax base.
“And we are already working on addressing those issues, and there will be proposals put out for consultation early in the new year,” Mr Dunne said.
He said the issue was in a highly complex area of tax law, and made more difficult by the need for international co-operation.
“Tax regimes around the world have largely been developed for an industrial age, and have had trouble keeping up with new business models and technologies in the internet age where companies are not contained by location or national borders,” Mr Dunne said.
“That is the shared challenge New Zealand and a lot of other nations face today.
“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.
Mr Dunne said that in the last quarter New Zealand has committed to negotiating a FATCA agreement with the US Government; signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters; and expanded its network of double-tax agreements.
“With the recent signing of the new agreement with Papua New Guinea, New Zealand now has 38 double tax agreements for exchanging information,” he said.
“Step by considered step, we are closing the gaps, and will continue to do so with the international community, so large multinationals will pay their fair share of tax,” he said.
The full report is available at www.taxpolicy.ird.govt.nz
Mr Dunne said that he was aware that people would have views on the matter and that he had instructed officials to keep him updated on the issue. He has also asked officials to take opportunities to engage with interested parties in the new year.
Mr Dunne said people are welcome to submit comments on the report to Inland Revenue at Policy.Webmaster@ird.govt.nz