Closing tax loopholes used by multinational companies will conservatively net the Government $100 million a year, Revenue Minister Judith Collins says.

Budget 2017 forecasts extra tax revenue from multinationals of $50m in 2018/19, increasing to $100m in the following two years.

Collins said that was a conservative estimate of the revenue expected to be raised through reforms currently under consultation.

"It is conservative because as we are still considering the issues raised by submitters...the total revenue raised is expected to increase when the Government's final policy decisions are made."


Advice from Inland Revenue was up to $300m a year in tax is being lost because of multinational tax avoidance.

Collins and Finance Minister Steven Joyce in March released three consultation papers, that propose new measures for taxing multinational companies.

The proposed changes include:

• Addressing concerns about multinationals booking profits from New Zealand sales offshore, despite the same sales being driven by New Zealand-based staff.

• Stopping companies using interest payments to shift profits offshore.

• Strengthening transfer-pricing legislation.

• Beefing-up Inland Revenue's powers when a company does not co-operate with a tax investigation.

The Government expects the changes to be implemented from tax years beginning on or after July 1 next year.


Yesterday Retail NZ's Greg Harford said the crackdown on multinationals did not go far enough, and the Government was missing out on revenue on goods being bought by Kiwis from foreign websites.

New Zealand is among 96 countries that are working on a multilateral tax treaty developed by the OECD to tackle tax avoidance strategies used by multinational companies, that are known by the acronym for base erosion and profit shifting (BEPS).

Both Australia and Britain have gone further than the New Zealand Government and imposed a diverted profits tax on companies trying to avoid national tax obligations.

A Herald investigation in March last year found the 20 multinational companies most aggressive in shifting profits out of New Zealand collectively paid virtually no income tax.

The companies in question, including Facebook, Google and Pfizer, said they followed New Zealand laws and differences in profitability between their New Zealand operations and elsewhere were because of different business models.

In March, the Herald revealed consumer electronics giant Apple paid no income tax to Inland Revenue over the past decade, despite selling billions of dollars' worth of iPhones and iPads to New Zealanders.