Tax rort clampdown to yield $250m

The Government expects to net $250 million over three years from moves it has set in train to clamp down on multinational tax avoidance, Finance Minister Steven Joyce says.

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

The likely steps include new rules to limit the interest that foreign companies can charge their Kiwi offshoots on intracompany loans.

There will also probably be new controls on ‘‘transfer pricing’’. These com- monly determine the prices local subsidiaries pay for functions performed at head-office such as accounting services and marketing support.

Other changes could tighten the definitions that govern whether businesses are deemed to be tax resident in New Zealand.

Joyce said the $250m the Government was forecasting in extra revenues from the changes was probably ‘‘conservative’’.

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

The figure is small compared with the Government’s total tax take, which is expected to total $74.6 billion this year and rise to $89.9b in the year to June 2021.

The steps to clamp down on multinational tax avoidance dovetail with the Organisation for Economic Cooperation and Development’s ‘‘Beps’’ programme, which was launched by G20 countries in the wake of the global financial crisis.

Beps’ main goal has been to prevent the likes of technology and pharmaceutical giants shifting profits to low-tax jurisdictions, or avoiding tax altogether by exploiting differences in countries’ tax laws.

Joyce said the Government moves were part of the Beps drive.