READER POLL RESULT: Should New Zealand move quickly to crack down on profit-shifting by multinationals?
Cracking down on profit-shifting by multinationals – everybody's backing it: Right-wing governments in the UK and Australia have recently introduced so-called "Google tax" measures, while France has put scary-looking police on the case.
Homegrown companies such as Spark and lobby groups such as NZ Rise say the government needs to move faster to level the playing field.
And now a Business Pulse poll of NBR readers, taken on Friday and over the weekend, reveals our subscribers are strongly on the same side. A whopping 89% think the government should move more quickly to crack down on profit-shifting by multinationals.
Of course, not quite everybody is backing it. Scott Morrison's government budget across the Tasman might have introduced new profit-shifting rules, new funding to back them and a 40% penalty tax. But Bill English's budget last week had not a peep on the subject.
Prime Minister John Key's March comment that it is not fair multinationals pay so little tax in New Zealand and his hint of unilateral action in the end came to naught.
A softly-softly slow and steady approach remains . And I'm obliged to say it's one endorsed by NBR economics editor Rob Hosking. He says reform is needed but fears what will happen if the process is driven by what he describes as "moral panic" rather than a measured policy making process. Another factor: the potential for a reciprocal action by countries where Kiwi multinationals are looking to expand (Rob is on leave today but listen to more of his thoughts in the NBR Radio clip above, recorded after the prime minister's brief spurt of enthusiasm for a crackdown).
Earlier, Revenue Minister Michael Woodhouse told NBR, “Inland Revenue is examining how New Zealand’s tax rules might be developed to help implement elements of the OECD’s recent 15-point action plan to combat base erosion profit shifting.”
He added, “We’re also in public consultation to advance the Automatic Exchange Of Information (AEOI), which aims to increase the transparency of international financial transactions.”
Submissions closed on March 31 and are now being assessed with an eye to possible reform from July 2017.
The issue remains controversial.
Today the French government said it wouldn't settle with Google over the €1.6 billion it alleges is owning in tax, and its finance minister said cases against other multinationals are on the way.
Here, the Fairfax-NZME merger application revealed Facebook and Google seem to be (still) invoicing a lot of their New Zealand revenue to offshore subsidiaries, with their estimated local turnover well north of that reported in their most recent Companies Office filings.