New Zealand To Get Tough With International Tax Evaders: To Work With OECD To Enforce Transparency And Compliance

New Zealand is planning to crackdown on tax evaders and combat the menace of avoidance by international firms. As part of the exercise, New Zealand will work with an international action plan being spearheaded by the OECD.  This was stated by Finance Minister Mr. Bill English. He told media persons in Brisbane that the early steps to implement the plan would be in place by 2016.

According to the finance minister, in the matter of tax evasion, the devil is in the detail. Multinational initiatives have gained quite a momentum in that difficult area. Mr English wanted all tax payments to be made transparent. He explained transparency with an example, “suppose if a company is present in New Zealand, we want to understand whether and where they are paying tax elsewhere. For that transparency is essential.”

The Finance Minister, speaking to media on the sidelines of the G20 Leaders’ Summit in Brisbane pointed out that G 20 Summit agenda has placed a high focus on combating tax avoidance. This is crucial for because, G20 countries make up 85 percent of global economic activity and 75 percent of global trade, reported TV. NZ.

“The multilateral initiatives are gaining more political support in seeking more transparency and enforcing tax compliance with regard to international taxation of corporations and individuals”, Mr. English added. He said the governments and people wanted to see the new generation of tech-oriented companies and individuals paying their fair share of taxes. It may be recalled that leading tech companies such as Amazon, Microsoft, Google and Apple have been under fire for booking profits in low-tax jurisdictions.

There are also countries such as Luxembourg who allegedly act as tax shelter for large corporations. In fact, European Commission president and former Luxembourg PM, Jean-Claude Juncker faced criticism at the G20 Meet for his role in turning the country into a tax haven. Mr. English, in an indirect reference to the controversy around Luxembourg said, “it is unacceptable in the developed world to be running a tax haven that undermines other people’s tax bases”.

New Mechanism

The Brisbane G20 meet did succeed in putting in place a mechanism for automatic exchange of tax information to curb tax evasion, among member countries by 2017. At G20, India raised this issue strongly and called for zero leniency on black money as it would be a menace and security risk. There was consensus among leaders of G 20 economies to evolve an action plan to tackle Base Erosion and Profit Shifting by 2015, to make sure that companies pay their fair share of tax, reported The Financial Express.

The G20 communique also underscored it, “In preventing cross-border tax evasion, we endorse the global Common Reporting Standard for the automatic exchange of tax information on a reciprocal basis. The exchange of information with other countries will begin by 2017 or end of 2018.”