31 May 2016

NZ a 'soft touch' on tax avoidance - Greens

8:29 am on 31 May 2016

The government is being accused of being a soft touch when it comes to ensuring multinational companies pay their fair share of tax.

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Bill English says the government remains committed to ensuring that everyone pays their share of tax according to the rules. Photo: RNZ/Elliott Childs

Australia, Britain and Canada have all announced new plans in their Budgets this year to crack down on multinational companies that avoid paying tax.

In his Budget speech last week, Finance Minister Bill English did touch on tax avoidance telling Parliament the "government remains committed to ensuring that everyone pays their share of tax according to the rules".

Mr English mentioned the independent review the government had ordered into New Zealand's foreign trust regime - which many argue allows the world's wealthy to hide money and avoid taxes.

He said the government would also continue to work with the OECD to address tax avoidance.

But the Green Party pointed to a lack of concrete measures that would close any loopholes used by multinational companies.

"Budget 2016 in New Zealand saw no new tax legislation and cut long-term funding for enforcement services," said Julie Anne Genter, the party's finance spokesperson.

"National confirmed it's a soft touch when it comes to big foreign-owned companies seeking to pay as little tax as possible here."

The Australian government this year introduced a Tax Integrity Package that will target multinational companies which artificially divert profits from the country, and tax them 40 percent on diverted profits.

French authorities have launched numerous raids on multinational companies' headquarters this year, such as Google and McDonald's, in tax probes.

While there was nothing specific in the Budget on tackling tax avoidance, the government has recently signed an international agreement on base erosion and profit shifting (BEPS).

Revenue Minister Michael Woodhouse said it would help ensure large multinationals paid their fair share.

From September 2018, New Zealand will share information with other tax jurisdictions that are signatories to the agreement.

"This new country-by-country reporting agreement goes to the very heart of such activity, by allowing participating tax jurisdictions to share and receive information about these large multinationals," Mr Woodhouse said.

"Under the agreement, large multinationals will have to provide information relating to economic activity, including the global allocation of income and taxes paid."

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