US tax monitoring deal signed

WELLINGTON: New Zealand has signed a deal with the United States which will allow it to find out whether multinationals are paying enough tax in this country.

Revenue Minister Judith Collins, who is at an OECD conference in Paris, said New Zealand was one of the first countries in the world to sign such a bilateral agreement.

She hailed it as ‘‘great news’’ in the fight to get large corporates to pay their fair share of tax.

An investigation in March last year found the 20 multinational companies most aggressive in shifting profits out of New Zealand collectively paid virtually no income tax.

The companies, including Facebook, Google and Pfizer, said they followed New Zealand laws and differences in profitability between their New Zealand operations and elsewhere because of different business models.

In March, it was revealed consumer electronics giant Apple paid no income tax to Inland Revenue over the past decade, despite selling billions of dollars’ worth of iPhones and iPads to New Zealanders.

Starting next year, Inland Revenue will receive more information about US companies operating in New Zealand, and will reciprocate with information about Kiwi companies.

‘‘This will further enhance Inland Revenue’s risk assessment processes to make sure that the right amount of tax is being paid,’’ Ms Collins said.

Last month’s Budget revealed for the first time how much New Zealand expected to net by closing tax loopholes.

Additional revenue of $50 million was forecast in 201819, rising to $100 million in the following two years.

Appearing before the Finance and Expenditure Committee yesterday, Finance Minister Steven Joyce said this was a conservative estimate.

‘‘We should be careful and not try to count our chickens before we’ve got too much of it in place,’’ he said.

‘‘I’m very confident about those numbers. I’m actually confident we’ll get more. But I thought to be conservative, let’s not overbook.’’

Mr Joyce said New Zealand was now ‘‘getting into the nuts and bolts’’ of its international tax crackdown, an issue which has plagued the taxpayer and required multilateral effort to address.

Three further policy changes on the issue were being developed, and discussion papers would be released soon.

He reiterated that any measures taken against US companies would also apply to New Zealand companies operating abroad.

‘‘We just need to always remember that the rules that apply here apply to exporters here, as well.

‘‘So we’ve got to make sure they’re fair both ways.’’

Mr Joyce noted that the Government had already netted $97 million a year through changes which required nonresidents to pay withholding tax on properties resold within two years, a move which was introduced in 2015. — NZME