The Labour Party would target multinationals operating in New Zealand to ensure they don't avoid paying tax if it wins power and is targeting $600 million over three years through a "diverted profits tax," says leader Andrew Little.
A Labour government would increase funding to Inland Revenue to chase unpaid taxes and give it the power to impose tax "at a penalty rate if they believe that tax has been deliberately avoided," he said.
"Even on current tax settings, multinationals should be paying more. Labour is budgeting to collect an additional $600 million over three years. We will resource IRD's investigations unit to do their job properly with an additional $30 million injection each year, Little said in a statement. Mr Little said the UK has had a positive experience adopting the measures and companies such as Amazon were now booking their profits in the UK rather than in jurisdictions with lower tax requirements.
But National Party campaign manager Steve Joyce says the government announced it will collect an initial $100 million annually in additional multinational tax in the Budget two months ago and the Labour Party is now announcing it will collect an additional $200 milion a year "without any plan as to how to get there".
Mr Joyce says the government is completing consultation on three separate areas of work to ensure multinationals pay their share of tax on activities in New Zealand, in line with recommendations from the OECD working group on multinational tax.
"These areas cover companies that use artifically high interest payments to shift profits offshore, companies that artificially avoid having a taxable presence in New Zealand, and companies that exploit hybrid mismatches between different countries tax rules."
He says the government has a detailed plan on dealing with the issue and "Labour are simply playing 'me too'."
Mr Little also released an open letter written to multinational companies in which he invites them to a round-table meeting immediately after the Sept. 23 election, assuming Labour wins power.
"I intend to address the rising discontent among New Zealanders regarding multinational companies not contributing fairly," he says in the letter. "I invite you to attend this meeting and work together to ensure New Zealand is a fair place to operate and a great place to live. I look forward to discussing this with you further."
"A diverted profits tax is an important tool to encourage multinationals to behave appropriately and pay their fair share of tax like every New Zealander who works for a living," he said. "They don't have tricky accountants to help them dodge their obligations."
This article is tagged with the following keywords. Find out more about MyNBR Tags
Most listened to
- Sunday Business With Andrew Patterson featuring George Day
- Ngati Manawa spokesman Kani Edwards discusses what a water bottling deal means for Murupara
- Hamilton Hindin Greene's Tom McBride discusses the week's market highs and lows
- Companies are more aware and prepared for cyber attacks but don't want to tell anyone, says Aura's Peter Bailey
- Tourism Industry Aotearoa chief executive Chris Roberts wants Labour to unveil more details about the tourism tax
- NBR Radio: The best interviews, with Grant Walker – updated daily