On 10.8.17, the Treasurer issued a press release welcoming New Zealand’s decision to join Australia in tackling multinational tax avoidance. He said: Australia is a strong advocate for all jurisdictions to adopt these measures.
New Zealand will take action against multinationals that use artificial arrangements to avoid having a taxable presence in New Zealand. In addition to reciting (again) Australia’s 2015 Multinational Anti-avoidance law (MAAL), that similarly attacks the artificial commercial structures used by multinationals to escape paying tax here. New Zealand has also announced a measure which makes it easier for tax authorities to deal with companies that do not co-operate with requests for information, which Australia achieves under its Diverted Profits Tax – by putting the onus on the multinational to justify its international tax arrangements.
It is also worth noting that New Zealand, like Australia, is a party to the OECD/G20 BEPS (Base Erosion and Profit Shifting) project. Both Australia and New Zealand have signed the BEPS multilateral convention which is designed to make it much easier to amend double tax agreements to help implement the BEPS measures. New Zealand has recently tabled that multilateral convention in its Parliament.
Of interest were a number of the specific figures that the Treasurer put beside the anti-avoidance measures.
- Over 30 corporate groups are currently restructuring, with more to follow. Restructures completed so far have resulted in around $6.5 billion in income per annum now being included in our tax base.
- The ATO’s Tax Avoidance Taskforce estimates this will lead to an additional $100 million in income tax being paid in the first year and over $300 million overall in the first four years after the MAAL came into effect.
- Notably, the restructuring in response to the MAAL also has had a significant impact of around $240 million in GST revenue to the end of 2016/17, to be received by the States and Territories.
- The Taskforce has strengthened the ATO’s capacity to identify and crack down on not only tax avoidance by large corporates and multinationals, but also private groups and high wealth individuals. The Taskforce is estimated to generate a $3.7 billion gain to revenue over the 2016-17/2019-20 forward estimates period.
[Treasurer’s media release; FJM; LTN 151, 10/8/17; TT August]