Inland Revenue throws down gauntlet

The Inland Revenue commissioner has urged large companies to "rebuild the trust of the New Zealand public" by being more open about their tax arrangements.

In a speech to the Chartered Accountants Australia and New Zealand tax conference in Auckland this morning commissioner Naomi Ferguson defended her organisations' approach to corporate tax collection but said more openness was needed.

"Transparency leads to trust whether it's at the local or international level, the public needs to feel confident the big players are paying the right amount of tax," she said.
 
"Corporate tax compliance is high in New Zealand and corporates have no need to be shy about telling the wider public about how much they contribute to our country.

"By being more transparent, we can help change the conversation on international tax affairs and rebuild the trust of the New Zealand public in our biggest corporates, especially the multinationals," she said.
 
The news comes after the issue of corporate tax avoidance rapidly climbed up the public agenda this year.

A Herald investigation in March into profit-shifting that found 20 large companies collecting $20 billion in New Zealand revenues collectively paid only $1.8 million in incomes taxes.

In May the Australian government announced at its budget it would implement a diverted profits tax to sting companies moving money unfairly out of the country, and in August the European Union stung Apple with a $20b tax bill after concluding it had funnelled international revenues through Ireland to evade tax.

The New Zealand government is understood to be mulling a package of measures similar to Australia's, as well as looking closely at the potential effect of enacting international recommendations to clamp down on the misuse of debt-loading.

Ferguson stressed Inland Revenue already had a close eye on the top end of town with its compliance focus document regime that currently sees 600 large firms subject to extra scrutiny.

Ferguson said this watchlist would expand next year to 900 companies, including all foreign-owned multinational reporting annual turnover of more than $30m.