20 Mar 2016

Labour targets multinational tax laws

5:06 pm on 20 March 2016

A law change is needed to make multinational companies pay their fair share of tax, the Labour Party says.

Caucus run 21/07/15

Photo: RNZ / Alexander Robertson

Such companies can pay less tax in New Zealand by declaring their costs here, and their profits in lower-tax territories.

World economies lose more than a quarter of a trillion dollars in revenue every year due to this legal form of tax avoidance, according to the Organisation for Economic Cooperation and Development.

Labour finance spokesperson Grant Robertson said the government had been complacent and must make sure everyone paid their fair share.

"It's a pretty fundamental principle that if you're operating inside New Zealand as a company, you're earning revenue - you should be paying the appropriate corporate tax rate on that revenue.

"Where loopholes can be exploited it appears that some companies will do that. It really is up to each government to make sure that we're both enforcing our law and creating a system that's fair."

Revenue Minister Michael Woodhouse said New Zealand's tax framework was exemplary.

In Britain, after strong criticism that it had been avoiding tax, Facebook was set to pay millions of pounds more following a major overhaul of the social media giant's tax structure.

Tax expert Robin Oliver warned this month that just because a company sold something like advertising into New Zealand did not mean the government had the right to tax it, particularly if it did not have a substantial physical presence in the country.

Get the new RNZ app

for ad-free news and current affairs