Over the past few years, we've heard endless tales about multinational companies cheating on their taxes by hiding their profits overseas. Thanks to legislation passed last night, that's about to stop:
The taxman will begin cracking down on multinational companies rorting the system next week.
The Taxation (Neutralising Base Erosion and Profit Shifting) Bill passed its third reading Parliament on Tuesday evening and will come into effect on Sunday.
Revenue Minister Stuart Nash said the new law will "address the problem of companies operating cross-border and using aggressive tax structuring to reduce the tax they pay".
The law will stop them from shifting profits through transfer pricing, high-interest loans, or pretending that business done in New Zealand is really done elsewhere. It should bring in about $200 million a year, but more importantly it enforces the principle that companies which extract a profit from New Zealand should pay taxes in New Zealand. No doubt sociopathic multinationals will find some other way to cheat eventually, but this should hopefully keep them in line for a little while.
