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Tax avoidance plan not enough: Labour

NZ Newswire logoNZ Newswire 13/12/2016

A move to crack down on tax avoidance by multinational companies has been welcomed by opposition parties but criticised for not going far enough.

A cabinet discussion document includes increased enforcement funding for Inland Revenue to target the issue.

"They are policy and legal bullets - and there may also be resource bullets. We're constantly having that conversation," Revenue Minister Michael Woodhouse told the NZ Herald.

But both Labour and Retail NZ say it's right that multinationals should pay their fair share of tax but the discussion paper doesn't go far enough.

They support New Zealand follow Australia's lead and to immediately require foreign companies to register for GST or duty on physical goods sold in the country.

Mr Woodhouse has left the door open for a diverted profits tax if the new package, which includes tightening loopholes on a company's taxable presence in New Zealand and giving Inland Revenue investigators more information gathering powers, fails.

"If we continue to get aggressive tax planning and tax arbitrage I won't rule out - I wouldn't call it the nuclear option, but the stronger option - a diverted profits tax," Mr Woodhouse said.

Labour finance spokesman Grant Robertson accused National of being scared to introduce a diverted profits tax.

"Their own paper fails to make a case for not using a fully-fledged diverted profits tax so it looks like they are bowing to pressure from multinational companies," he said.

Retail NZ public affairs general manager Greg Harford said it was a "no brainer" and "easy" to fix the loophole on foreign companies selling products online.

"This deprives the government of hundreds of millions of dollars in tax revenue ever year, and means that foreign firms have a competitive advantage when selling to New Zealanders," he said.

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