The Government has announced a set of tax rules for multi-national companies which it says will result in them paying an additional $200 million a year.
Finance Minister Steven Joyce says the rules will significantly strengthen the current regime and ensure multi-nationals are taxed fairly on their actual level of economic activity in New Zealand.
The measures will be put into a tax bill that will be introduced by the end of the year, and will come into force in July next year.
“It’s very important that every company operating in New Zealand pays their fair share of tax,” Mr Joyce said this week.
“While most multi-national companies follow the rules, there are some that attempt to minimise their New Zealand tax obligations.”
Google and Facebook have been reported as being among those that pay little tax compared with the level of their activities.
The new measures will.
<2009>Stop foreign parents charging their New Zealand subsidiaries high interest rates to reduce their taxable profits in New Zealand.
<2009>Stop multi-nationals using artificial arrangements to avoid having a taxable presence in New Zealand.
<2009>Ensure multi-nationals are taxed in accordance with the economic substance of their activities in New Zealand.
<2009>Counter strategies that multinationals have used to exploit gaps and mismatches in different countries’ domestic tax rules to avoid paying tax anywhere in the world.
<2009>Make it easier for Inland Revenue to investigate multi-nationals which do not