Hon Bill English
Minister of Finance
Hon Todd McClay
Minister of Revenue
6 October 2015
Media statement
OECD releases full BEPS action plan
The OECD last night released its final package of actions to address base erosion and profit shifting (BEPS). The Minister of Finance Bill English, and Minister of Revenue, Todd McClay say that the plan, representing two years of intensive work by the OECD and G20 nations will be a significant step forward in the fight against BEPS.
“BEPS behaviours can result in multinationals paying little or no tax anywhere in the world, so this announcement is a big step forward and the culmination of over two years’ work by the international community” Mr English says.
The package released last night by the OECD finalises the BEPS Action Plan, the first half of which had been delivered late last year.
The plan aims to address root causes rather than dealing with symptoms. Important causes of BEPS are the lack of transparency in tax systems, the misalignment between countries’ tax rules and the effectiveness of rules in general. As such, the plan includes measures ranging from new minimum standards to revision of existing standards, and developing common approaches amongst nations. Member countries have also agreed to peer review and monitoring.
“Issues facing tax jurisdictions today were undreamt of when tax rules and tax systems were first designed” says Mr McClay.
“The central issue has always been that international tax standards have not kept pace with developments in the global economy. Tax rules were developed in an age of steam and iron. In the meantime, business practices have progressed light years from that point. So this OECD co-ordinated approach will mean we will now have international consensus on tax law standards bringing global tax rules firmly up to date.
“The plan gives us all a good basis to take stock of our international tax rules and domestic rules too,” says Mr McClay.
However Mr McClay says that no decisions have been made by New Zealand on implementation or timing and that any changes would be subject to the usual public consultation process.
Mr English agrees; “We need to always consider the effect that tax policy has on the productive sector of the economy. Decisions have to be made as to what extent the OECD recommendations are applicable to New Zealand and the best way to implement them, giving thought to matters such as compliance costs. This will be high on the agenda for the Government in the coming months.
“It matters because New Zealand is becoming more and more attractive as a place to do business and invest in, so it’s critical that we continue to strengthen our tax rules to ensure overseas companies pay their fair share” he says.
“This is not about hammering large multinationals. The OECD makes the point that the current situation often results in double non taxation, that is, corporates not paying tax either in their home jurisdiction or in the country they’re doing business in.
“The OECD’s BEPS plan is careful to avoid over taxation. The Government wants to ensure that New Zealand remains a good place to do business, but also wants to make sure that everyone pays their fair share of tax” says Mr English.
Go to http://www.oecd.org/tax/beps.htm to find full details of the OECD material.
Media contact: Lesley Hamilton 027 490 1345