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Govt way behind eight ball on corporate tax avoiders - Peters

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Fuseworks Media
Fuseworks Media

"Given that the New Zealand government is softening up the public for a GST increase on imported goods and services, by lowering the $400 exemption, it is high time to stop turning a blind eye to corporate tax avoidance in New Zealand," says New Zealand First Leader Rt Hon Winston Peters.

"Tax avoidance by major corporates and multinationals is a festering issue. The issue has been gaining traction and was one of the topics at the 2014 G20 Summit in Australia. Ordinary people and most businesses resent the apparent ease with which major corporates can structure their activity to avoid tax.

"Last week the Australian public had it confirmed that the wealthiest global corporations operating in Australia- names like Apple, Google and Microsoft, BHP Billiton and Rio Tinto - pay virtually no tax.

"The Australian Senate has just commenced a major investigation into tax avoidance by corporates and multi-nationals. (Senate Inquiry into Tax Avoidance and Aggressive Minimisation by Corporations Registered in Australia and Multinational Corporations Operating in Australia)

"What has already been revealed is a taxation system riddled with unfair loopholes. There is no reason to think that New Zealand is any more effective in countering such tax avoidance practices.

"There is a wide array of techniques corporates and multi-nationals use to minimise their tax. They include using marketing hubs, parking profits offshore, and debt shifting to move profits from higher tax jurisdictions to low or no-tax jurisdictions such as Singapore, Ireland and the Netherlands.

"As an example, Apple paid only about $80 million tax on more than $6 billion turnover in Australia. Apple set up an Irish marketing arm, Apple Sales International, which takes ownership of Apple products made in China and sold in Australia and Europe at a drastic mark up because the company has a much lower tax rate in Ireland.

"If New Zealand were to hold an investigation into corporate and multinational tax avoidance the results would be very similar to Australia.

"Turning a blind eye to corporate and multi-national tax avoidance is costing countries like Australia and New Zealand billions. The situation seems almost out of hand.

"The Australian Tax Office (ATO) advised the Senate Inquiry that an estimated $A60 billion a year was being moved by internal company transfers to tax havens. This is all potentially income that could be subject to tax.

"Submissions to the Inquiry indicate that the problem of tax avoidance is growing. Corporate tax avoidance is already widespread, and is seemingly treated as an accepted practice. The tax avoidance problem that used to be limited to the top 50 or so companies operating in Australia has now spread well below that to those with annual turnover less than $A100 million.

"The Australian Treasury Deputy Secretary Rob Heferen admitted to the Inquiry that Treasury had no idea how much potential revenue Australia was actually losing. Tackling corporate tax avoidance is not easy and ultimately the solution requires global co-operation. But leaving action to, say, the OECD is no answer - action is needed now.

"One approach raised at the Senate Inquiry is to "name and shame" tax avoiders. Public shaming campaigns have worked in other countries. For example, in the UK, Starbucks agreed to voluntary backpaying of tax after customers revolted with protests and boycotts after their tax avoidance practices were exposed.

"What is emerging at the Inquiry is how lukewarm the Australian Government and the Australian Tax Office has been in pursuing corporate tax avoiders. The ATO has been reluctant to tackle tax avoiders, probably on the grounds of cost and complexity. Sounds familiar!

"Ultimately tax is about fairness. Wealthy corporates and multinationals are freeloading on the New Zealand system. Australia looks like it is getting serious about tax avoidance - when will we do the same in New Zealand?," asks Mr Peters.

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