Some of New Zealand’s largest companies are calling on any future government to lower the corporate tax rate, which they say is becoming high compared to other countries.
Published jointly by peak business lobby Business New Zealand and accounting firm Deloitte, the Major Companies Tax Survey also expresses concern that “attention on multi-nationals should not tar all large companies”.
The general perception across society that multinational companies don’t pay their fair share of tax was “not always based on an informed view”, says the report, which was based on a survey of Business NZ’s Major Companies Group, some 80 large New Zealand businesses, and the Corporate Taxpayers Group, a separate body representing some 40 large New Zealand businesses.
The report says New Zealand’s corporate tax rate of 28 per cent was starting to look high compared to an OECD average of 22 per cent and Australia’s commitment to drop to a 25 per cent rate by 2027.
To remain competitive, it may require a reduction to between 20 and 25 per cent in the next decade.
High on the list of large businesses’ wishes is an end to non-deductibility of so-called “black hole expenditure”, including the removal of depreciation for industrial buildings and seismic strengthening work.
Seismic strengthening work should attract either direct government compensation or tax deductibility, the report said.
“Related to the issue of global competitiveness, when developing policy, major companies are also calling on the government to put New Zealand’s interests first,” the report recommended.
It also calls for tax policy that avoids “avoid unpredictable or time-consuming administration, regular shifting of the boundaries, changing interpretations and increasingly complex legislation”.
Respondents also favoured tax incentives to encourage commercial research and development.
Recently, industry association, Retail NZ, called for the government to crackdown on multinational tax avoidance by foreign retailers.
The industry association welcomed the Labour Party’s proposal to target multinational companies, but wants action on multinationals to focus specifically on GST as well as corporate tax.
