| | |
Homepage | login or create an account

Budget 2015 'refreshingly free of tax changes'

Read More:
Fuseworks Media
Fuseworks Media

Apart from the much discussed announcement of extra funding for property tax compliance and a number of measures directed at providing extra tools to Inland Revenue for this work, there were refreshingly few changes to tax settings announced in today’s Budget.

Deloitte CEO Thomas Pippos welcomed that there were no precipitous actions taken on the tax front noting that there is potential for more wholesale changes on the horizon.

"Both Inland Revenue’s work around Base Erosion and Profit Shifting (BEPS) and their business transformation (BT) project have the potential to reshape New Zealand’s tax settings in terms of what is collected and how it is collected," says Mr Pippos.

As the OECD concludes its recommendations on BEPS (the practice of certain multinational corporations exploiting gaps and mismatches in different countries’ tax rules) later this year, we can expect to see the New Zealand response start to emerge.

The Australian response in their Budget was to introduce certain anti-avoidance measures aimed at specific multinationals and the introduction of legislation to charge GST on the supply of services by offshore suppliers - the so called "Netflix tax."

"We believe it is likely that New Zealand will follow suit and introduce a similar regime to charge GST on imported services like digital downloads. But whatever other responses to BEPS may look like, it is important that they be targeted and proportional to the issues facing New Zealand business," says Mr Pippos.

Detail of the possible shape and direction of BT emerged earlier this year with the issue of Inland Revenue’s Green Paper. It is clear that the vision for BT is wider than a simple move to digital. The proposals have the potential to fundamentally reshape how tax is collected and will impact every taxpayer, either in their own right or as an employer.

"It will be important to ensure that the changes arising from BT result in a reduction of compliance costs to taxpayers. To be transformational, BT cannot be about the transfer of compliance costs from Government to the private sector. BT must reduce compliance costs for all," says Mr Pippos.

"Tax plays a fundamental role in attracting and retaining business activity in our economy. Most important is how the tax burden falls, which is not just a question of each tax in isolation but rather the combination of rate, base, restrictions and incentives - within our broad base low rate framework.

"New Zealand has challenges with size and distance from market. Accordingly, we need to ensure that our tax settings are competitive and not a barrier to attracting and retaining business and capital," he concludes.

About : money

Find the latest money news and 'how to' guides on Guide2Money.

Ask our researchers your personal finance questions.

Your Questions. Independent Answers.