New Zealand firms say the government's move to close foreign tax loopholes exploited by multinationals is a good step, although it remains to be seen how this will work.

The government said it expected to raise at least $250 million over the next three years, with gains expected to come from several initiatives proposed in the last nine months, however Retail NZ's Greg Harford said the move did not go far enough.

"The Government is rightly looking at ways of cracking down on multinational tax avoidance in relation to transfer pricing, debt and hybrid financial instruments," Harford said.

"But it's missing out on a much bigger revenue stream in relation to low value goods sold from foreign websites to New Zealanders."


Harford said with no requirement for foreign firms to pay GST, the government was losing an estimated $235 million a year.

Meanwhile, the Budget does away with the contentious treatment of so-called 'black hole' expenditure, relating to expenses borne by a company exploring a commercial initiative that is later abandoned.

Revenue Minister Judith Collins said tax consequences should not be an obstacle to businesses innovating and pursuing opportunities for growth.

"Where no asset is created on the balance sheet, feasibility expenditure would be immediately deductible for income tax purposes," Collins said.

"Where an asset is created, we are proposing that the feasibility expenditure would be capital expenditure for tax purposes."

An exposure draft on the initiative is available from today and will be open for discussion from July 6.

While tax forecasts include a contingency for possible lost revenue from the initiative, the sum is not disclosed in the Budget documents.

Bruce Wallace, tax partner at Deloitte, said the government had made its views very clear on what it wanted to do.

"There is currently a consultation process that's going on around a number of different proposals in this area, some of which have come out more recently and some of which started last year," Wallace said.

"The Government is clearly committed to making some changes and we're just working through the details with officials as to what that should look like and where the issues really are."

Wallace said closing the loopholes was a healthy conversation to have.