Labour threatens multinationals with diverted profits tax

Labour Leader Andrew Little and Deputy Leader Jacinda Ardern. Photo by Lynn Grieveson for Newsroom.

Labour has promised to collect an extra $200 million a year in tax from multinationals and has threatened to introduce a British and Australian-style diverted profits tax if companies such as Google, Facebook and Apple don't increase their tax payments here.

Labour Leader Andrew Little announced the policy at the same time as sending a letter to the top 50 multinational companies identified by the Parliamentary Library as potentially able to pay more tax.

He said he would convene a meeting of the leaders of the top multinationals in New Zealand if he formed a Government after the September 23 election.

"I intend to address the rising discontent among New Zealanders regarding multinational companies not contributing fairly," he said in the letter inviting them to the meeting.

Little said a Labour Government would inject a further $30 million per year into IRD's investigations unit to chase down extra tax revenues from multinationals.

"The fact is, many multinationals are ducking their tax obligation and leaving it to Kiwi taxpayers to foot the bill. This is simply not fair. At a time when we need to urgently invest in hospitals, schools and housing, we need multinationals to make their fair contribution too," Little said.

“If multinationals aren’t prepared to pay their fair share, Labour will introduce a diverted profits tax, to enable New Zealand tax authorities to impose tax at a penalty rate if they believe that tax has been deliberately avoided," he said.

Little said the British experience had led to Amazon booking its profits there rather than in Luxembourg.

“A diverted profits tax is an important tool to encourage multinationals to behave appropriately and pay their fair share of tax like every hard working New Zealander."