The Government can close some of the loopholes multinational companies are using to avoid paying their fair share of tax by adopting similar measures to Australia, the Green Party said today.
Australia passed new legislation in December 2015 to target multinational companies that are avoiding paying regular company tax rates. Multinationals now face 100 percent tax penalties if caught shifting profits, along with new transparency and reporting requirements to give the Australian Tax Office (ATO) a better picture of how these multinational companies operate internally. The ATO has been given an additional A$88 million in new funding to enforce the measures.
“The Government can move swiftly to address some of the worst cases of tax avoidance by multinational companies by adopting similar measures to Australia,” said Green Party Co-leader James Shaw.
“Australia is using a mix of tough tax penalties, increased disclosure, and increased funding for tax enforcement to address multinational tax avoidance.
“We don’t need to wait for the OECD to move to start collecting some of the hundreds-of-millions of dollars of tax revenue that we’re missing out on.
“Tax expert Craig Elliffe said on National Radio this morning that there was nothing in the OECD plan to address some of the tax avoidance techniques used by the likes of Google and Facebook.
“The Prime Minister should stop hiding behind the slow progress of the OECD and take some domestic action like Australia has.
“New Zealanders shouldn’t have to wait for the OECD to get fairer tax treatment here.”
The IRD warned both the Ministers of Finance and Revenue in 2013 that multinationals were avoiding paying tax by profit shifting and that work to protect the New Zealand tax base “should be a key focus” of tax policy work over the next 18 months.
“The National Government had a clear warning from IRD in 2013 that this should be a key priority for tax work,” said Mr Shaw.
“To its credit, the Government has worked constructively within the OECD framework, but has been caught sitting on its hands with the work it could be doing here at home to close these massive tax loopholes.
“It’s time for the Ministers of Revenue and Finance to lift their game and force multinational companies to start paying their fair share of taxes here.”
Link to the IRD warning (page 2):