Labour to Target $600M in Unpaid Taxes from Multinationals

Claudine Rigal
Juillet 18, 2017

Labour leader Andrew Little is threatening to apply a penalty tax on the profits of multinational companies that deliberately avoid paying their fair share of tax in New Zealand.

"It's simply not acceptable that Kiwi kids are doing homework in the back of cars while multinational companies reap big profits but skirt around their obligations to pay tax".

He told Morning Report an extra $200 million a year could be collected, which would make a "huge difference" and represented "a heap of teachers, a heap of nurses and doctors".

"I expect that will probably rise once we get greater finality in terms of the final measures we take there".

Mr Little told Newshub on Tuesday he has written to "about 60" multinational companies in an effort to get them to pay their fair share of tax.

He doubted firms would pull out of New Zealand in response; it hadn't happened in Britain when it implemented the DPT law.

Leader Andrew Little said according to Inland Revenue, New Zealanders were missing out by hundreds of millions because multinational companies can hide their profits in complicated worldwide schemes.

If Labour formed the next government, he said, he would hold a roundtable meeting with leaders from large foreign corporates about "rising discontent" among New Zealanders on the issue.

Little said the extra $600m Labour planned to raise could be used to pay for more classrooms, better health and more social housing.

The Government's moves were part of the OECD's global base erosion and profit shifting (BEPS) drive aimed at clamping down on multinational tax avoidance.

Little said National had been going "soft" on multinationals and its performance was "pathetic". "It's time for a fresh approach", Mr Little said.

Inland Revenue began consulting in March on new measures to stamp out tax rorts.

Complying with the OECD recommendations would get the same result as a diverted profit tax, which the government hadn't ruled out entirely, but believed was heavy-handed.

Little is writing to up to 50 multinational companies operating in New Zealand, including the 20 companies identified in a Herald investigation into which companies paid virtually no tax in New Zealand because they or their New Zealand subsidiaries shifted profits out of the country.

"It's a joke that the Government itself has estimated that multinationals are avoiding $300m of tax per year, but is only budgeting on its policies recouping $100m of that".

Tax expert Michael Littlewood said there was no prospect large worldwide firms would withdraw from New Zealand if it introduced a diverted profit tax as Australia and the United Kingdom had.

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