Wednesday, November 12, 2014

Why is National giving grants to tax cheats?

In July last year, the government announced a new system of R&D grants to "encourage innovation". So who gets these grants? Tax-cheats:

Radio specialist 4RF received a grant in the January round. It is 81 per cent owned by a holding company in the Cayman Islands.

Networking company Endace Technology, which was taken over in 2012 by United States company Emulex, is owned by two tax haven-domiciled entities, one in the Isle of Man and one in Ireland. It also got a grant in January.

Atlantis Healthcare Group, a "world leader in designing and implementing patient support and adherence programmes", was approved for a Callaghan grant last month. It is 76 per cent-owned by an entity in the British Virgin Islands, where the company tax rate is zero.

Cattle breeding specialist CRV also got its grant in October. It is 100 per cent-owned in the Netherlands, although this might just be because its owner is actually Dutch.

Then there's whiteware maker Fisher & Paykel Appliances, taken over in late 2012 by big Chinese company Haier. Well, Haier is Chinese, but it holds F&P through a subsidiary in the low-tax jurisdiction of Singapore.

F&P Appliances got a Callaghan grant in January that it described as "commercially sensitive", adding to previous grant funding recognised last year of $1.3m.

And of course there's Bayer, which uses the Netherlands as a tax-haven to zero its NZ profits so it can screw the New Zealand taxpayer while collecting millions in grants.

This isn't acceptable. We should not be doling out government grants (or indeed, government money of any sort, including contracts) to tax-cheats. Only companies which actually pay their fair share of taxes in New Zealand, and which don't use dodgy foreign regimes to cheat us, should be eligible for our assistance.