The government is looking at closing a tax loophole that allows large multinational companies to reduce the tax they pay in this country by shifting profits overseas.
The tax reducing practice, known in tax circles as a hybrid mismatch arrangement, is the subject of a discussion document released by Inland Revenue.
It proposes that this country adopt OECD recommendations which would remove the advantages of using such arrangements.
"The government considers that New Zealand's rules on hybrids can be stronger," Revenue Minister Michael Woodhouse said.
"Hybrid mismatch arrangements are one of the base erosion and profit shifting strategies used by multinationals to exploit the difference between how two countries might treat a cross-border transaction, resulting in less tax," he said.
"It is important that our rules complement those of other countries, particularly Australia and the UK who have both announced their intentions to adopt the OECD recommendations in this area."
Submissions on IRD's proposals close on 17 October.
To read the full discussion document click on the following link:
1 Comments
There are far better and cheaper ways to collect taxes for government spending!!
The IRD or any other tax collecting authorities in the world are not going to write reports to their Minister of Revenue or equivalent depending on the jurisdiction that make that organisations efficient, productive and makes the organisation a fraction of its current size.......In the case of the loopholes I see the IRD growing their size which is their goal..........Tax authorities like any bureaucracy do nothing more than ensure they have an ever growing department they even try to brainwash the public into thinking they are business like in operations.
The IRD does not collect taxes as they currently try to portray to the public it is business that does this job for them............... AS the IRD is not in the business of tax collection but rather the business of ensuring tax compliance why have they taken so long to address address this very old loophole???
In NZ our SME's have been effectively subsidising the big businesses who have had access to all these loopholes and the IRD only find it pertinent to supply a report to the Minister of Revenue now!! I think it is pertinent that every person working in the IRD should be subjected to a special tax on their salaries equivalent to the loophole tax dodge amount that has been allowed by them........this tax should continue on their salaries until the revenue target amount of the loophole has been achieved!! Don't think you can evade my new proposed tax by changing jobs the tax responsibility transfers with you!! Normal non or late -filing and other penalties will apply!!
It is time NZ looked at completely overhauling the tax system and bring it into the 21st Century. An APT Tax (Automatic Payment Transaction Tax) is the only viable option to introduce as far as I can see........It seems to address all issues across all business and transaction types.....everyone is treated the same regardless of business or transaction type. And one of the other great benefits would be all of business is on a level playing field so the chasing of certain industry type tax advantages is eliminated.
Every hour that anyone in an SME business is sitting in an office completing compliance tasks whether it is for the IRD or other bureaucratic organisation is slavery and servitude!!
An Example: 1 hour of compliance work per day x 5 days per week = 5 hours p/w x 52 weeks of the year = 260 hours of unpaid compliance work.
Now the general public, politicians, bureaucrats and economists need to get their heads around what the hell is actually going on.........because SME's are doing thousands of hours of compliance for various bureaucracies and often also have to pay for goods and services related to the particular compliance being undertaken.............journalists also need to get their heads around these issues!!
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