18 Mar 2010

More IRD scrutiny as tax take falls

2:50 pm on 18 March 2010

Businesses face a higher level of scrutiny from the tax man as the Inland Revenue Department tries to counter a decline in corporate tax revenues, a leading accounting firm warns.

KPMG says the global financial crisis has put pressure on tax departments worldwide to ensure they are getting the maximum amount of revenue owed to them.

In New Zealand, the firm says, Inland Revenue is cracking down on loopholes, tax avoidance and is increasing the number of audits.

According to Treasury figures, corporate tax revenue fell 12% to $8.5 billion in the year to January - a drop of 20% compared with two years ago.

KPMG senior tax partner John Cantin says the decline is behind the higher level of scrutiny from Inland Revenue and a fundamental shift in the way companies look at tax.

He says firms are more aware of risks of reducing tax as far as possible within the law, and are now looking at how they manage the risk rather than how they may benefit from the tax system.