Tax rort inquiry would shed no light, says minister

Revenue Minister Michael Woodhouse has brushed off a call for an inquiry into the tax practices of multinational companies, saying he couldn’t see what new light it would shed.

Labour finance spokesman Grant Robertson called for an inquiry in the wake of continued media interest over the amount of tax multinationals are paying in New Zealand.

But Woodhouse was ‘‘not convinced it would tell us something we don’t already know’’.

He was confident a massive project being undertaken by the Organisation for Economic Cooperation and Development (OECD) to clamp down on multinational tax rorts would be a success, though he acknowledged it might not deliver results quickly.

The Inland Revenue Department is legally banned from discussing the tax affairs of individual companies, even if it believed doing so would be in the public interest to maintain public trust and confidence in the tax system.

The ban has prevented journalists and lobby groups from digging deeper into individual companies’ tax practices.

Woodhouse was unsure whether the restriction might be something that could be examined during a scheduled review of the Tax Administration Act.

Robertson stopped short of saying the ban should be lifted but said it was one thing that should be considered by an inquiry.

‘‘Inland Revenue need all the tools they can get to ensure people meet their obligations,’’ he said.

‘‘On a superficial level, it is pretty clear that would make it a lot easier for them to tell us whether or not people are meeting their obligations . . . The reason I am not saying an outright ‘yes’ is that is why we need the inquiry.’’

Google New Zealand paid $361,000 tax in 2014, even though annual purchases of Google products and services by New Zealand customers are believed to run to hundreds of millions of dollars.

However, the company has repeatedly stated it meets all its obligations.

Robertson agreed it was an accepted international principle that companies’ activities were taxed in the countries in which they took place, rather than in the countries where they sold goods.

That meant, for example, that Fonterra would also pay relatively little tax overseas, he agreed.

‘‘But we can look at the activities of [multinationals] and look at the tax paid and see that there is not a match in New Zealand.’’

In many cases, much of the revenue that overseas-owned subsidiaries earn in New Zealand does not come from local customers but from their multinational parents.

Robertson said such arrangements raised ‘‘a big question’’.

The OECD official leading its effort to stamp out corporate tax rorts, Pascal Saint-Amans, told Fairfax NZ in October that he believed the crackdown would be successful.