What is corporate profit-shifting in New Zealand?

Corporate profit-shifting is when multinational companies move profits offshore to reduce the amount of tax they pay in New Zealand.

What is a Diverted Profits Tax?

A Diverted Profits Tax is designed to stop large firms from shifting profits overseas to avoid paying tax in the country where those profits were actually earned.

Why does Build The Nation want New Zealand to follow Australia?

Build The Nation argues that Australia’s Diverted Profits Tax provides a model for making multinationals pay their fair share and helping fund public infrastructure.

Why are mining royalties not enough on their own?

Build The Nation says royalty increases alone are limited if multinational mining and drilling firms can still shift profits offshore before New Zealand gets its fair return.

Corporate Profit Shifting in New Zealand Must End

Build The Nation says New Zealand is losing hundreds of millions through offshore profit-shifting, while politicians pretend minor royalty tweaks will solve the problem. Richard McIntosh argues the country should follow Australia’s lead and make multinationals pay their fair share to help fund the infrastructure New Zealand desperately needs.

Build The Nation’s Richard McIntosh today called for politicians to tackle corporate profit-shifting to fund new national assets.

Why Build The Nation says royalty reform is not enough

“Shane Jones’ recent call to review Crown minerals royalties misses the point.” said Mr McIntosh. “The real issue for New Zealand is big firms like Shane’s favourite mining and drilling companies avoiding hundreds of millions in tax payments by using various ruses to shift profits offshore tax-free. The minerals royalties, paid on revenue after tax-free profits have already been exported, are effectively reduced to a small percentage of a small percentage. So bumping them up is obviously good, but in the same way a fart is good, and with about as much effect.”

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How offshore profit-shifting reduces what New Zealand gets back

An obvious way to increase revenue from royalties payments would be to compel big multinational mining and drilling companies to declare their whole income in New Zealand, and charge royalties on that income. But instead, politicians like Shane Jones allow New Zealand’s tax system to sit by while mining and drilling profits flow offshore instead of funding new national infrastructure for New Zealand.

Why New Zealand should copy Australia’s Diverted Profits Tax

“Australia’s Diverted Profits Tax addresses this issue.” said Richard McIntosh. “Let’s do the same here and bring in millions more in funding to build new national capacity. I’m sure Shane knows all about this but he’d rather keep his mining and drilling mates happy by tinkering with the royalties payments instead. And that’s failing New Zealand because the needs of the nation need to be served by big corporates not the other way round but no doubt he’ll find a way to disagree with that too.”

Build The Nation’s message is summed up by Australian Federal Tax Commissioner Chris Jordan statement from 2016: “My message to companies operating in Australia is clear – you must pay your fair share of tax on the profits you earn here.” It’s time we did the same in New Zealand, too.

Natural resources must serve New Zealanders first

“New Zealand’s lands and waters are the right of all citizens.” continued Mr McIntosh.

“New Zealanders must not be locked out of the benefits they provide. The activities of locally-based multinationals, be they fishing, mining, forestry or tech firms, must serve New Zealand’s interests by paying their fair share and not leaving the nation with the cost.”

If politicians are serious about funding the infrastructure New Zealand needs, they must stop letting multinational firms shift profits offshore while the public carries the cost. Making corporates pay their fair share is not radical — it is the minimum price of doing business in this country.