16th September 2016

A recent survey conducted by the New Zealand Herald revealed that a whopping 75% of Kiwi business leaders believe the world’s largest multi-nationals—Google, Apple, and Facebook, for example—don’t pay an adequate amount of tax globally. Roughly two-thirds of the same executives surveyed think these companies’ tax avoidance could have negative effects on the New Zealand tax system while a meagre 16% said they believed the government is doing enough to thwart the issue.   

The survey comes on the heels of the European Union (EU) concluding that Apple funnelled its international revenues through a loophole in Ireland. The EU imposed a NZ$20 billion retrospective tax bill on Apple and sent alarms through several other countries where the popular American electronics maker does business, including New Zealand. The action also was an indication of the tax strategies of large multi-national business. When all is said and done, Apple could owe Ireland up to about NZ$30.7 billion in back taxes and interest.

An inquest by the same newspaper in March into tax evasion of offshore companies with subsidiaries in New Zealand revealed that 20 multi-national corporations with a combined revenue of around NZ$10 billion paid less than NZ$2 million in corporate income tax. The investigation looked at over 100 multi-national corporations.

Internationally New Zealand sits slightly behind the curve in implementing multi-national tax reform. Just a few months ago, Australia began cracking down on multi-national profit-shifting meaning the companies were actively searching and transferring revenue to tax havens within the country known as ‘lower tax jurisdictions’. The country has implemented a ‘Google tax’ on all shifted profit in response. In 2015, the Australian Tax Office (ATO) received an additional A$1 billion in tax revenue by aggressively going after companies suspected of profit-shifting on a large scale. There were 30 companies in all ranging from the pharmaceutical, energy, and technology industries. The United Kingdom (UK) requires all large corporations to publicly disclose their comprehensive tax strategies. 

It should be noted, the executives pointed out, that public outrage over this issue was not entirely founded and that while the unlawful tax practices of a few ‘bad apples’ understandably put a bad taste in the public’s mouth, they are not indicative of how all multi-nationals conduct business. Some experts believe that the notion of overarching distrust New Zealand society has that the wealthy don’t pay their fair share isn’t at all accurate.

Accountancy Insurance is the go-to place for quality and peace of mind when looking for tax audit protection. 

 

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