The IRD warned the Government in 2013 of massive, systematic tax avoidance by multinational companies but National is still to act on it, the Green Party said today.
The New Zealand Herald today released analysis that showed multinational companies operating in New Zealand could have avoided paying up to $500 million in tax last year. The IRD warned both the Ministers of Finance and Revenue in 2013 that multinationals were avoiding 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.
“Big, foreign-owned multinationals are not paying their fair share of tax here in New Zealand and National has done little to stop it,” said Green Party Co-Leader James Shaw.
“By ignoring all the warning signs, the National Government has effectively aided and abetted tax avoidance on a massive scale by foreign multinationals.
“Analysis by the Herald shows foreign multinationals could have avoided paying $500 million in tax here. That’s enough tax to fund the salaries of 9,259 nurses, 7,601 cops, or 10,498 primary school teachers.
“These foreign multinationals benefit from our collective investment in schools, hospitals, and the police, but are not paying their fair share of taxes to fund them,” Mr Shaw said.
Both the UK and Australia have recently passed new laws to stop multinational companies artificially shifting their profits to low tax countries to avoid paying tax.
“The Government will say they are working multilaterally with the OECD to address this tax rort, which is good, but the OECD has been trying to address this issue since 1979,” said Mr Shaw.
“We can’t afford to wait another year to close this massive multinational tax loophole.
“Australia and the UK have shown you can move unilaterally with law changes that are in harmony with the direction international efforts are moving.
“The IRD will also need increased funding to fight these big corporations who are among the most sophisticated tax avoiders in the world. Companies like Apple have yearly revenues bigger than the entire New Zealand economy.
“The National Government could have returned to surplus a year earlier if it’d gotten as tough on foreign multinationals as it has tightened welfare rules and enforcement,” said Mr Shaw.