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Inland Revenue Commissioner’s call to action for multinationals

Inland Revenue Commissioner Naomi Ferguson has issued a call to action for multinationals to be more transparent about their tax affairs.

The Commissioner is urging companies to sign up to the Statement of Tax Principles for International Businesses which is laid out by the OECD’s Business & Industry Advisory Committee (BIAC).

She made the call while launching the 2016 edition of the Multinational Enterprises Compliance Focus Document at this morning’s Chartered Accountants Australia and New Zealand tax conference in Auckland.

Inland Revenue is encouraging boards to maintain a tax strategy document, have systems in place to manage tax risks and make sure annual reporting is transparent enough so that anyone can understand the information on taxes paid.

“The compliance document shows what we’re doing to ensure corporates pay their fair share of tax,” Ms Ferguson said.

“Now it’s the turn of the big companies, both locally and foreign-owned, to make sure they’re being transparent too.

“By being more transparent, we can help change the conversation on international tax affairs and rebuild the trust of the New Zealand public in our biggest corporates, especially the multinationals.

“Corporate tax compliance is high in New Zealand and corporates have no need to be shy about telling the wider public about how much they contribute to our country.”

The Multinational Enterprises Compliance document details how Inland Revenue is continuing to ramp up the scrutiny of big businesses by increasing the number of corporates that will receive closer attention.

Since 2012, almost 600 New Zealand and foreign–owned groups have been under IR’s magnifying glass.

From next year this will expand to almost 900 groups including all foreign-owned multinationals with turnover more than $30m.

All these corporates will be required to submit what’s called the Basic Compliance Package, which means they have to supply annual information on their group structure, financial statements and tax reconciliations. In addition the foreign-owned corporates will be required to complete a targeted International Questionnaire.

The Compliance Focus Document also has an update on New Zealand’s progress against the OECD’s base erosion and profit shifting (BEPS) Action Plan which reflects NZ’s participation as a good global citizen, whilst tailoring our initiatives to the NZ context.

“Transparency leads to trust whether it’s at the local or international level, the public needs to feel confident the big players are paying the right amount of tax,” Ms Ferguson said.

The full document can be read online.