web analytics

NRT: Taking on our local tax cheats

Written By: - Date published: 10:37 am, November 30th, 2012 - 26 comments
Categories: capitalism, economy, International, national, tax - Tags: , , ,

From the indefatigable I/S at No Right Turn


Taking on our local tax cheats

overseas, governments and media are asking increasingly annoyed questions about tax cheating by multinational companies such as Starbucks,Apple, and Facebook. Now Labour joined the campaign, and has taken up the cry locally:

Facebook New Zealand paid just $14,500 tax – give or take a few dollars – last year, making a mockery of Peter Dunne’s refusal to consider closing tax loopholes for multinationals, says Labour’s Revenue spokesperson David Clark.

“The New Zealand arm of the world’s most used online search tool, Facebook, paid only $14,497 in tax last year.

“In 2010 its tax bill was a mere $5,238. For a company that has 2.2 million users in New Zealand and makes billions worldwide, that’s barely believable.

“It appears Facebook is using the ‘double Irish’ tax technique. That’s where it uses Irish Facebook, which pays just 12.5% tax, to determine revenue and expenses. This ensures the company can put most of its revenue through countries with low-tax systems.

“Peter Dunne calls that ‘legitimate tax avoidance’. I call it a rort.

Clark is right – it is a rort. And it is not one we should accept. Across the Tasman, the Australian government is planning to close the loophole which allows these companies to export these profits tax-free. But Peter Dunne has no plans for us to follow suit, and his past public statements suggest he supports tax evasion.

Tax cheats steal from us all. Every dollar they save in tax from these tricks is a dollar we have to pay, borrow, or cut – a dollar we don’t get to spend on schools, hospitals and state houses. The government should make these companies pay their fair share. And if the present government refuses to do so, because they are on the side of the tax cheats, we should elect one that will.

26 comments on “NRT: Taking on our local tax cheats”

  1. karol 1

    Up on Stuff in the last half hour, Dunne seems to be responding with a request for information.  Doesn’t mean he’ll recommend action though.
     

     Revenue Minister Peter Dunne has asked for an urgent report on tax avoidance by multinationals….

    Dunne said he had asked officials to report to him urgently on “both the implications for New Zealand of the steps other countries are taking, and also the options available to us here”.
     
    “I am expecting to receive that advice soon, and the Government will then consider what should be done,” he said.

    • David H 1.1

      Or it could be the beginning of yet another screeching Uturn.

    • Draco T Bastard 1.2

      It will be Dunne starting the sensible conversation that will result in some changes that will, essentially, be the same thing in different words.

  2. Herodotus 2

    Whist agreeing in his sentiment.
    David undermines his position by getting turnover confused with profit and his calculation in the tax rate (If the report has been reported correctly !!)

    He said Google New Zealand was also “funnelling revenue” through its low-tax Irish counterpart, paying only $109,038 tax on $4,447,898 in revenue last year.

    “That’s two per cent, way below our 28 per cent corporate rate.

  3. Ennui in Requiem 3

    When St Peter greets newly departed souls at the Pearly Gates he decides their eternal fate by reading from the Book of Life. It is quite clear that the book does not distinguish between personal and corporate tax cheating….it quite clearly judges the the owners of corporate shares to be personally responsible for cheating Caesar. All sin is ascribed to a person (a soul), corporates quite clearly are not people, they have no soul so cannot sin. Clearly they are owned by sinners.

    • Rogue Trooper 3.1

      Dark and Foreboding and all through the house…not a Rat was registered, just shooting for “Grouse!”

      • Ennui in Requiem 3.1.1

        We have no past, present or future here in Purgatory, eternity is just that, beyond time, through a glass darkly…no foreboding,only boding! And the boding is bad for earthly rats, St Pete has them truly registered. Grouse eh!!!

    • Mike 3.2

      However, under statute law, corporations are persons. They have all of the legal rights of natural persons with none of the attached moral and ethical considerations to worry about. We have allowed the legal system to require corporations to ensure their primary responsibility as legal ‘persons’ is to the shareholder and to maximise the return for the shareholder. That’s why I shake my head when I hear people protesting about companies putting profit before people. Yes it is entirely wrong to put profit before people, but there is no point in taking companies to task, they are only doing exactly what they are designed to do and are required to do by law. It is those who make the statutes that are to blame.

  4. Rich 4

    We need a different tax basis.

    I suggest setting an expected profit margin on a per-sector basis. Large companies would be expected to account for their turnover and taxed on the expected or actual profit, whichever’s higher. Where a business is genuinely growing and investing in NZ, it could get a dispensation for a limited period (up to 5 years) but would be expected to start making normal profits after that. Where the point of delivery is ephemeral (like advertising-based websites) the basis would be global turnover times customers in NZ.

  5. tracey 5

    A minister of revenue who in his fourth year asks for this information, its a joke.

    There is no will.

    A company can pay its lawyers over 100,000 from non company funds, lose the case, wind up the company and pay nothing. How about this law chanfe. If a company pays to defend itself from non company funds the judgment and costs can be sought from tge directors personally and trust of which they are trustee or settlor. Simple, but it wont happen. 39m each year of welfare fraud is nothing compared to these rorts, perhaps labour could make a meme from this.

  6. tracey 6

    Eir, it cld be done so easily too. For example builders and designers are now personally liable for problems for ten years. But not developers, not councils… There is no will.

  7. tracey 7

    Has anyone notice that profit announcements often are phrased as profit is down x % … Makibg it seem like the company has done poorly, poor company. Actually its still in profit. You find it with banks alot.

  8. ianmac 8

    According to a chap on Morning Report the trouble is that these entities are not bricks and mortar but are mostly intellectual property which is very difficult to identify let alone tax. He thought it would need a concerted international response.

    • insider 8.1

      IP can be taxed if there is a claim for its value and payments are made for it, just like bricks and mortar. Transfer pricing is a well known and monitored in other areas where pricing benchmarks are well established, even for professional services (eg lawyers and accountants) as well as steel and oil.

      Maybe the issue is identifying the true ‘value’ of that IP and associated licensing arrangements. I believe IRD has pretty wide powers to deem a value if it feels the commercial boundaries are being pushed.

    • Rich 8.2

      So you simplify it:
      – global revenue $4bln
      – NZ customers 2mln / 1 bln = 0.2%
      – NZ imputed revenue $8mln
      – Imputed profit 25% = $2mln
      – Tax due = 28% x 2mln = $560k

      • Policy Parrot 8.2.1

        Transfer pricing is a legal way to conduct business affairs. Its ostensible purpose, under the aegis of instrinsic motivation, is to make sure that managers are rewarded/punished in line with their actual performance, and not held accountable for things that they cannot control for – i.e. currency fluctuations etc.

        However, in the last twenty, especially ten years, transfer pricing has become a convenient way to minimise tax by minimising business unit profit in high tax jurisdictions and maximising in low tax jurisdictions. It is something will be hard to develop anti-avoidance measures for – the only possible solution is to harmonise international business tax rates.

        Remember, any tax system has to be arbitary, i.e. rules (and not case) based. The other potential easy adjustment that a future Minister of Revenue (lets face it, Peter Dunne wont do this) could do is to have the higher of:

        A. Either the assessed tax as per current (28% of gross profit).
        B. The equivalent NZ$ market value of the previous year’s CEO’s remuneration package.

        Sure, it might not recover as much as we probably should if the companies were operating under the spirit of the tax laws, but any extra remuneration to the boss would mean extra revenue for the state. Note for Google (NZ), that would mean a tax bill of NZ$130 million (for just 2012/13 alone). However, companies will likely change their remuneration policies, so such largesse should not be anticipated.

        • Draco T Bastard 8.2.1.1

          It is something will be hard to develop anti-avoidance measures for – the only possible solution is to harmonise international business tax rates.

          No it isn’t and no it doesn’t.

          One of the reasons why businesses get tax deductions on expenses is because the expense is often paid to another business and so will be taxed anyway with the government, in theory, losing very little tax. But things have changed. That used to be the case when it was guaranteed that the tax deducted expense was paid to a business in the same country which is no longer true.

          This leads to two changes:
          1.) All income from NZ will be taxed at NZ tax rates (and I think companies should be on PAYE as well and not have a flat tax rate far below what individuals pay)
          2.) Business expenses that get paid to businesses (including branches of the same business) outside of the country are not tax deductible.

          Tax that we charge are to support this country. Having internationalised companies avoiding paying those taxes is puts excess stress on the companies and individuals in this country.

          • Policy Parrot 8.2.1.1.1

            It is something will be hard to develop anti-avoidance measures for – Thinking in the same box, it is. Thinking outside the box obviously has different results. I am not confident about the chances of international collaboration on business tax rates either, some countries will have a lot to lose.

            Draco – while I admire sentiment – ultimately the tax system has to be arbitary. And by moving to tax income/revenue, it wont be arbitary anymore – naturally high margin firms will be favoured over those with low margins. And there are whole industries (e.g. airlines) that operate on a tiny percentage (legitimately) of profit. And then there is the whole issue whether we want to reward those (relatively) who are more likely to gauge more from their customers.

            The other alternative is for the IRD to be involved in the setting of transfer prices (again, issues with arbitary treatment). Still think the idea of setting the tax bill as equivalent to the ulimate CEO’s remuneration is an idea worth pursuing.

            Addendum: Any discrimination against foreign firms may just increase costs for local consumers, and also penalise those who are forced through no option to look overseas for sourcing components etc.)

    • vto 8.3

      ” the trouble is that these entities are not bricks and mortar but are mostly intellectual property which is very difficult to identify let alone tax”

      man some people get away with twaddle don’t they? How is that any different from the intellectual property that you get when you see your solicitor or accountant? It’s not. There is a charge and so there should be a tax. Just like those of us out here in lalaland – if only I was some intellectual property which only existed in cyber space ……..

  9. tracey 9

    Ianmac, it always comes down to will. It was easy enough to change labour laws under urgency

    • Jim Nald - Once Was National 9.1

      “it always comes down to will”

      Yeah, well, on issues of these kind for NACT-Dunne,
      it is not a matter of political “will” and should turn out to be “won’t”.

Recent Comments

Recent Posts

  • Wellington Town Belt Bill becomes law
    The Wellington Town Belt will grow by 120 hectares after the passing today of the Wellington Town Belt Bill, Labour MP for Wellington Central Grant Robertson says. “The Town Belt is loved by Wellingtonians as a green and open space… ...
    7 hours ago
  • Wellington Town Belt Bill becomes law
    The Wellington Town Belt will grow by 120 hectares after the passing today of the Wellington Town Belt Bill, Labour MP for Wellington Central Grant Robertson says. “The Town Belt is loved by Wellingtonians as a green and open space… ...
    7 hours ago
  • 26 weeks paid parental leave the best Mother’s Day present
    If National truly values motherhood, they would drop their threat to scupper 26 weeks paid parental leave, says Labour MP Sue Moroney. “As New Zealand prepares to celebrate Mother’s Day on Sunday, John Key should remove his threat to… ...
    8 hours ago
  • 26 weeks paid parental leave the best Mother’s Day present
    If National truly values motherhood, they would drop their threat to scupper 26 weeks paid parental leave, says Labour MP Sue Moroney. “As New Zealand prepares to celebrate Mother’s Day on Sunday, John Key should remove his threat to… ...
    8 hours ago
  • Peering through the Huntly coal smokescreen
    Energy Minister Simon Bridges revealed in Parliament this week he has no idea what majority state-owned power companies are up to, when he wrongly claimed that Genesis Energy would not burn coal at Huntly unless there was a shortage of… ...
    GreensBy Gareth Hughes
    9 hours ago
  • Peering through the Huntly coal smokescreen
    Energy Minister Simon Bridges revealed in Parliament this week he has no idea what majority state-owned power companies are up to, when he wrongly claimed that Genesis Energy would not burn coal at Huntly unless there was a shortage of… ...
    GreensBy Gareth Hughes
    9 hours ago
  • Burger King dumps caged eggs!
    I’m not a fan of fast food companies, but a few days ago I was thrilled to see fast food multinational Burger King announcing that they are going to dump caged eggs in New Zealand. They join other food companies,… ...
    GreensBy Mojo Mathers
    11 hours ago
  • Burger King dumps caged eggs!
    I’m not a fan of fast food companies, but a few days ago I was thrilled to see fast food multinational Burger King announcing that they are going to dump caged eggs in New Zealand. They join other food companies,… ...
    GreensBy Mojo Mathers
    11 hours ago
  • Smoke and Mirrors on Pharmac funding
    Today’s announcement by John Key and Jonathan Coleman on Pharmac funding is a classic piece of financial jiggery-pokery, says Labour’s Health spokesperson Annette King.  “While I welcome any boost to the Pharmac budget this does not go far enough. ...
    13 hours ago
  • Firearms Inquiry calling for submissions.
    Parliament’s Law and Order select committee (of which I am a member) has today called for public submissions to its firearms inquiry. This conversation should have been live since last year, when the Police Association started talking about their concerns… ...
    GreensBy David Clendon
    13 hours ago
  • Firearms Inquiry calling for submissions.
    Parliament’s Law and Order select committee (of which I am a member) has today called for public submissions to its firearms inquiry. This conversation should have been live since last year, when the Police Association started talking about their concerns… ...
    GreensBy David Clendon
    13 hours ago
  • National playing politics with children’s lives
    John Key’s Government is playing political games with the lives of children by refusing to support a bill which will ensure every home in the country is warm and dry, Leader of the Opposition Andrew Little says. “National says that… ...
    14 hours ago
  • Unemployment rise demands Budget response
    The rise in unemployment shows the Budget must contain concrete plans for job growth that deliver for all New Zealanders, not just the few at the top, says Labour’s Finance spokesperson Grant Robertson. “After eight years under National it is… ...
    14 hours ago
  • School funding falls by $150 per student
    Parents are having to fork out even more for their kids’ education after the Government cut school funding per student by $150 in the past year, Labour’s Education spokesperson Chris Hipkins says. “According to the Education Ministry, its total per… ...
    16 hours ago
  • School funding falls by $150 per student
    Parents are having to fork out even more for their kids’ education after the Government cut school funding per student by $150 in the past year, Labour’s Education spokesperson Chris Hipkins says. “According to the Education Ministry, its total per… ...
    16 hours ago
  • Government must clamp down on dodgy PTEs
    The Government must ensure all international students coming to New Zealand are legitimate after a survey of those approved in Mumbai found only 9 per cent had genuine intentions and met English language requirements, Labour’s Education spokesperson Chris Hipkins says.… ...
    1 day ago
  • Government must clamp down on dodgy PTEs
    The Government must ensure all international students coming to New Zealand are legitimate after a survey of those approved in Mumbai found only 9 per cent had genuine intentions and met English language requirements, Labour’s Education spokesperson Chris Hipkins says.… ...
    1 day ago
  • Chance to crack down on foreign speculators
    If John Key is serious about stopping foreign speculators driving house prices out of the reach of Kiwi families, he will support Labour’s Member’s Bill to ban offshore investors from buying existing homes, Labour’s Housing spokesperson Phil Twyford says. “My… ...
    1 day ago
  • IRD had foreign trusts review on action plan
    The IRD was so ready to review foreign trusts it had the review on its action plan in November 2014, just before the Revenue Minister met with John Key’s lawyer, says the Leader of the Opposition Andrew Little. “The IRD… ...
    1 day ago
  • IRD had foreign trusts review on action plan
    The IRD was so ready to review foreign trusts it had the review on its action plan in November 2014, just before the Revenue Minister met with John Key’s lawyer, says the Leader of the Opposition Andrew Little. “The IRD… ...
    1 day ago
  • Child Youth and Family Review and Māori
    I wrote this blogpost sitting in Parliament listening to the Attorney General’s first reading speech on the Tauranga Moana Iwi Collective Redress and Ngā Hapū o Ngāti Ranganui Claims Settlement Bill. He has acknowledged the impact of colonisation that made… ...
    GreensBy Jan Logie
    1 day ago
  • Rebuilding Christchurch – a lost opportunity?
    In rebuilding Christchurch, the city has a rare chance to build in a sustainable, creative and people-centred way. We can create a city that is so much more than a simple re-construction of buildings and transport links. Christchurch could be… ...
    GreensBy Eugenie Sage
    2 days ago
  • Rebuilding Christchurch – a lost opportunity?
    In rebuilding Christchurch, the city has a rare chance to build in a sustainable, creative and people-centred way. We can create a city that is so much more than a simple re-construction of buildings and transport links. Christchurch could be… ...
    GreensBy Eugenie Sage
    2 days ago
  • Minister must ensure 111 issue is fixed
    The Police Minister must ensure the 111 fault is fixed as an urgent priority as a 40 minute wait can be the difference between life and death, says Labour’s Police spokesperson Stuart Nash. “The Police have said the fault lies… ...
    3 days ago
  • New Zealand a world leader – in unaffordable housing
    The National Government has made New Zealand a world leader – in unaffordable housing, Labour’s Housing spokesperson Phil Twyford says. “The latest International Monetary Fund report shows New Zealand had the world’s second fastest growth in house prices at the… ...
    3 days ago
  • New Zealand a world leader – in unaffordable housing
    The National Government has made New Zealand a world leader – in unaffordable housing, Labour’s Housing spokesperson Phil Twyford says. “The latest International Monetary Fund report shows New Zealand had the world’s second fastest growth in house prices at the… ...
    3 days ago
  • Hospital meals making you sick
    I don’t know about you but I felt a bit sick watching Health Minister Jonathon Coleman eat supposed Dunedin hospital food last week.  Dunedin people have tolerated a crumbling hospital, lower access to services, longer waiting times and gross food… ...
    GreensBy Metiria Turei
    3 days ago
  • Hospital meals making you sick
    I don’t know about you but I felt a bit sick watching Health Minister Jonathon Coleman eat supposed Dunedin hospital food last week.  Dunedin people have tolerated a crumbling hospital, lower access to services, longer waiting times and gross food… ...
    GreensBy Metiria Turei
    3 days ago
  • Key needs to stop shifting and come clean
    John Key’s position on his lawyer’s offshore trusts lobbying has changed yet again with the Prime Minister admitting he told Todd McClay that Ken Whitney had approached him, says Labour’s Finance spokesperson Grant Robertson. “Yet again information has to be… ...
    3 days ago
  • Key needs to stop shifting and come clean
    John Key’s position on his lawyer’s offshore trusts lobbying has changed yet again with the Prime Minister admitting he told Todd McClay that Ken Whitney had approached him, says Labour’s Finance spokesperson Grant Robertson. “Yet again information has to be… ...
    3 days ago
  • Revolutionary art in Palmerston North
    Last night I was a judge at the May Day Cup, an annual theatrical event which celebrates International Workers Day. The event was organised by stalwart unionist Dion Martin and included a range of performers competing for the Cup. This year… ...
    GreensBy Catherine Delahunty
    4 days ago
  • Revolutionary art in Palmerston North
    Last night I was a judge at the May Day Cup, an annual theatrical event which celebrates International Workers Day. The event was organised by stalwart unionist Dion Martin and included a range of performers competing for the Cup. This year… ...
    GreensBy Catherine Delahunty
    4 days ago
  • Andrew Little visits Zaatari refugee camp
    Leader of the Opposition, Andrew Little, has visited the largest Syrian refugee camp in the world, Zaatari in Jordan, a day after seeing New Zealand troops at Camp Taji in Iraq. Mr Little spent several hours in the camp, meeting… ...
    4 days ago
  • Com Com’s Z Energy decision anti-competitive
    The Commerce Commission’s decision to allow Z Energy to buy Caltex can only undermine the competition in the fuel industry that is needed to ensure New Zealanders pay the lowest price for petrol, Labour’s Consumer Affairs spokesperson David Shearer says.… ...
    5 days ago
  • Com Com’s Z Energy decision anti-competitive
    The Commerce Commission’s decision to allow Z Energy to buy Caltex can only undermine the competition in the fuel industry that is needed to ensure New Zealanders pay the lowest price for petrol, Labour’s Consumer Affairs spokesperson David Shearer says.… ...
    5 days ago
  • OAG raps Govt over the knuckles on HNZ contracts
    The Government has been rapped over the knuckles by the Auditor General over its failure to properly manage $2.3m of contracts and conflicts of interest in relation to a merchant banker advising them on the state house sell-off, says Labour’s… ...
    5 days ago
  • OAG raps Govt over the knuckles on HNZ contracts
    The Government has been rapped over the knuckles by the Auditor General over its failure to properly manage $2.3m of contracts and conflicts of interest in relation to a merchant banker advising them on the state house sell-off, says Labour’s… ...
    5 days ago
  • Brownlee must step in as EQC spin exposed
    Gerry Brownlee needs to step in after EQC’s desperate spin in the wake of yesterday’s landmark settlement has been exposed by its own documents, says Labour’s Canterbury spokesperson Megan Woods. “Yesterday’s settlement showed that thousands of homes may not have… ...
    6 days ago
  • Brownlee must step in as EQC spin exposed
    Gerry Brownlee needs to step in after EQC’s desperate spin in the wake of yesterday’s landmark settlement has been exposed by its own documents, says Labour’s Canterbury spokesperson Megan Woods. “Yesterday’s settlement showed that thousands of homes may not have… ...
    6 days ago
  • OIO must explain Argentine pollution prosecutions
    The Overseas Investment Office (OIO)has questions to answer about how it safeguarded our sensitive land by allowing foreign investors with criminal prosecutions to purchase Onetai Station in Taranaki, says Labour’s Land Information spokesperson David Cunliffe.   “Rafael and Federico Grozovsky… ...
    6 days ago
  • Aussie banks in NZ should ban lending to offshore buyers
    ASB, Westpac and ANZ must confirm whether or not they will continue to fund the over-heated property market by lending to non-resident offshore home buyers, Labour’s Housing spokesperson Phil Twyford says. “This issue has arisen because their parent banks have… ...
    6 days ago
  • Aussie banks in NZ should ban lending to offshore buyers
    ASB, Westpac and ANZ must confirm whether or not they will continue to fund the over-heated property market by lending to non-resident offshore home buyers, Labour’s Housing spokesperson Phil Twyford says. “This issue has arisen because their parent banks have… ...
    6 days ago
  • Murray McCully needs to come clean over Tokelau ferry debacle
    Foreign Minister Murray McCully needs to come clean on why a New Zealand aid-funded vessel intended to service the Tokelau Islands is delayed, over budget and failed its sea trials, Labour’s Foreign Affairs spokesperson David Shearer says. “The new ship… ...
    6 days ago
  • Full independent inquiry needed to save New Zealand’s reputation
    Revelations that John Key's personal lawyer and trust advisor led a lobbying campaign to shut down a review of New Zealand's foreign trust regime makes the case for a full scale independent inquiry a matter of urgency, Labour's Finance spokesperson… ...
    6 days ago
  • Full independent inquiry needed to save New Zealand’s reputation
    Revelations that John Key's personal lawyer and trust advisor led a lobbying campaign to shut down a review of New Zealand's foreign trust regime makes the case for a full scale independent inquiry a matter of urgency, Labour's Finance spokesperson… ...
    6 days ago
  • Andrew Little visits NZ troops in Iraq and refugees in Jordan
    Opposition Leader Andrew Little has visited New Zealand troops at Camp Taji, Iraq. Mr Little also met with Iraqi Defence Minister Khaled Al-Obedih and senior military officials from the Coalition forces in Iraq. He now heads to Jordan to see… ...
    6 days ago
  • Workplace death toll still too high
    It’s a damning indictment on the Government that as workers gather to remember their lost workmates on Worker’s Memorial Day, New Zealand’s workplace death toll is still far too high, Labour’s Workplace Relations and Safety spokesperson Iain Lees-Galloway says. “At… ...
    7 days ago
  • Workplace death toll still too high
    It’s a damning indictment on the Government that as workers gather to remember their lost workmates on Worker’s Memorial Day, New Zealand’s workplace death toll is still far too high, Labour’s Workplace Relations and Safety spokesperson Iain Lees-Galloway says. “At… ...
    7 days ago
  • Minister must come clean on implications of landmark settlement
    Gerry Brownlee has urgent and serious questions to answer in the wake of today’s landmark EQC settlement, which potentially has major implications for thousands of Cantabrians, says Labour’s Canterbury spokesperson Megan Woods. ...
    7 days ago
  • Mossack Fonseca links to OIO approvals must be investigated
    The Minister for Land Information must investigate and disclose how many applications to the Overseas Investment Office (OIO) have links to Mossack Fonseca, says Labour’s Land Information spokesperson David Cunliffe. “Labour can now reveal the OIO approved an application from… ...
    7 days ago

Public service advertisements by The Standard

Current CO2 level in the atmosphere