Tech tax could be on the way
The Government has requested advice from the IRD about a possible “tech tax”.
Finance Minister Grant Robertson told reporters yesterday he and Revenue Minister Stuart Nash had requested a briefing on revenue taxes, colloquially known as “tech taxes”.
The news comes as the UK joins Spain in rolling out a tax on revenues of large multinationals. There has been growing concern such companies do not pay their “fair share” of tax, often by artificially inflating costs charged to themselves to make it appear they are less profitable than they actually are.
The companies then repatriate revenue to low-tax jurisdictions where it is booked as profit and taxed at a much lower rate.
The New Zealand Herald revealed last year that Apple, the world’s most valuable company, paid no tax in New Zealand in the last decade despite sales of $4.2 billion here.
The Government has attempted to address this practice through the BEPS Act, which makes it more difficult for companies to artificially inflate their costs.
Robertson said he had requested “options and information” about a revenue tax.
“Clearly the long-term solution is a multi-lateral one, but the UK and Australia have expressed frustration with that and I share some of that frustration,” Robertson said.
He said the report would be due back before the end of the year. He did not rule out implanting a revenue tax on the back of IRD’s report.
“It depends on what IRD comes back with, clearly if you’re acting unilaterally like that you’ve got to be aware of the consequences and whether we have the ability to collect revenue, but it’s something we believe is worth looking at,” he said.
Overnight, British Chancellor Philip Hammond unveiled a 2 percent tax on UK earned revenue of companies with international revenues greater than £500 million (NZD$980 million).
The tax is expected to raise £400 million (NZD$785 million) a year after it is implemented in 2020.