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  Reply # 1566472 6-Jun-2016 13:51
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joker97: Why is our tax so high?


It could be lowered if everyone paid their fair share of taxes. I wonder if NZ reduced the company tax rate to slightly below Irelands, whether we could entice these overseas countries to based their headquarters for tax, in NZ. That could be a solution for NZ, but may annoy a lot of other countries.

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  Reply # 1566501 6-Jun-2016 13:56
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ajobbins:

 

nathan:
freitasm:

 

Google, Apple, Microsoft, Adobe and others probably pay less tax in New Zealand than a lot of us around here.

 



Microsoft New Zealand reported a profit of $8.1 million on revenue of $78m, paying $3.9m in tax

 

But they are still not paying tax in NZ on a lot of the profit they make in NZ.

 

My Office365 sub is billed out of Singapore with no GST. There is a Singaporean GST number on the invoice, but like NZ , GST is zero rated on international services, and the company tax rate is about half that of NZ.

 

 

 

 

 

 

 

you bought a service hosted out of Singapore not NZ

 

 

 

the NZ company tax rate is 28%, so they have in fact paid NZ tax on their NZ profits.

 

 


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  Reply # 1566559 6-Jun-2016 15:43
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nathan: you bought a service hosted out of Singapore not NZ

 

No reason Microsoft NZ couldn't bill me locally, the DC location isn't really relevant to billing. The fact of the matter is that it's tax advantageous for MS to bill me ex Singapore with a company tax rate of 17%.

 

the NZ company tax rate is 28%, so they have in fact paid NZ tax on their NZ profits.

 

Never disputed that they paid tax here, but it's a matter of fact that some of the services they sell into NZ (Like Office365) are billed out of offshore locations ultimately resulting in less tax paid by Microsoft globally.





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  Reply # 1566567 6-Jun-2016 15:56
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Tax avoidance schemes are illegal in NZ.

At the end of the day companies never pay tax, it's consumers of goods & services the company creates that are paying company tax. These companies aren't sitting there with a printing press spewing out money. Tax is built into the cost of doing business.

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  Reply # 1566568 6-Jun-2016 16:01
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I think that expecting a company like microsoft to set up an online service to be billed in any country that the buyer happens to be in is a more absurd idea. You expect them to waste time selling services from the data center company to a NZ company only for that to then be onsold to a NZ consumer. That will serve no purpose other than to jack prices up even more than they are.

 

It will be like the old importers industry where it goes thru 3 people before it is in the shop and things are 4x the price of other places since everyone wants to make profit on doing nothing but moving boxes. Except in this case there are no boxes of goods so even less reason for a NZ reseller to be involved in the transaction.

 

If you are so concerned that your suppliers are not paying enough tax, then hunt out a local IT hosting company that can provide you with what you need.

 

This isnt some elaborate tax scam, its simply an international business based in a country that has the best access to other markets and taxation structure.





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  Reply # 1566796 6-Jun-2016 22:16
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nathan: Tax avoidance schemes are illegal in NZ.

At the end of the day companies never pay tax, it's consumers of goods & services the company creates that are paying company tax. These companies aren't sitting there with a printing press spewing out money. Tax is built into the cost of doing business.

 

Bingo.






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  Reply # 1566809 6-Jun-2016 23:49
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I think an international corporation has the right to arrange its affairs in such a way as to minimise their tax burden within the law. This is the same as any of us shopping around to minimise the cost of a new smart phone or groceries.


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  Reply # 1566816 7-Jun-2016 01:07
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What type of tax are you referring to? Income tax, import duty, or GST on sales.

If you had a business here, and someone phoned you from another country and asked to buy one of your products, do you believe your business should pay income tax in the customer's country on the profits from that transaction?

Your expenses are here, your operations are here. You wouldn't go and set up a company in every country that you exported to would you? Unless it made business sense (operational, logistical, financial, etc) for you to do so.


Being that Google Play Music is available over the internet it's basically available worldwide from Ireland. So why should they go through the expense of setting up Play Music companies and data centres around the globe so they can pay income tax in local rates to each of their buyers' countries? Imagine if governments forced that upon your business?


The buyer should pay the import duties.

Regarding sales taxes (e.g. GST), where was the service performed? http://www.ird.govt.nz/ecommerce-tax/ecommerce-gst/business-australian-ecommerce-gst.html#013. The buyer pays the sales tax, the seller collects it and then is responsible for forwarding it to the buyer's tax department.


Edited to improve readability.

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  Reply # 1566819 7-Jun-2016 01:34
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nathan:

 

 

 

the NZ company tax rate is 28%, so they have in fact paid NZ tax on their NZ profits.

 

 

 

 

 

 

These companies do pay tax on their profits, however some use the Double Irish arrangement, due to the intellectural property being owned offshore. This page has more details. Interesting the companies who use this method.   https://en.wikipedia.org/wiki/Double_Irish_arrangement


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  Reply # 1566820 7-Jun-2016 01:42
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UHD:

 

I think an international corporation has the right to arrange its affairs in such a way as to minimise their tax burden within the law. This is the same as any of us shopping around to minimise the cost of a new smart phone or groceries.

 

 

 

 

Comparing Tax and shopping for a commodity like a phone, are two totally different things. NZers can't shop around for the best tax deal. You have to pay the IRD your tax, you can't say, well tax in Ireland is lower, so I will pay Irelands tax rate instead, because it is cheaper. Not only that but Ireland get the benefit of the money they get from the tax paid, and not NZ inc. I always think of the tax I pay, as my contribution to NZ inc, to keep it running. It is like insurance too, incase you need a helping hand by the sate for health or other needs. If everyone paid their fair share of tax, we wouldn't have the need for charities, life saving drugs would be funded, and education would likely all be funded, without the need to get a loan. Unfortunately a lot of NZs economy is now being funded by cheap debt, to overseas countries.


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  Reply # 1566838 7-Jun-2016 08:15
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Increasing company tax will increase unemployment which in turn reduces the the tax take and increases Government spending. It's a fine line and a complex track to walk.




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  Reply # 1566848 7-Jun-2016 09:12
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While countries are running deficits (only two things going on  - governments are not collecting enough tax and/or spending too much).  Company tax is set at a level in line with personal tax- else the burden of paying tax falls from wage and salary earners who can't shift income to take advantage of a lower rate.

 

I don't support the concept suggested above that "it's consumers who pay (the company tax)".  The consumers (ie citizens) will end up paying anyway, through higher personal taxes which are going to be needed in order to keep the books balanced.

 

The counter-argument that reducing company tax will be an incentive / stimulus to the economy is probably true, but there's no free lunch.  If you eliminated personal income tax, there'd be a big boost as well - it would be a darned sight cheaper to get everything done.  IMO there's very little moral difference between the concept of company tax minimisation and for example a tradesperson doing "cashies", one just happens on a local scale, the other on a global scale.

 

Global reform is needed, the IMF, World Bank argue for it - especially post GFC - but it falls on deaf ears.


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  Reply # 1566876 7-Jun-2016 09:48
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mattwnz:

 

UHD:

 

I think an international corporation has the right to arrange its affairs in such a way as to minimise their tax burden within the law. This is the same as any of us shopping around to minimise the cost of a new smart phone or groceries.

 

 

 

 

Comparing Tax and shopping for a commodity like a phone, are two totally different things. NZers can't shop around for the best tax deal. You have to pay the IRD your tax, you can't say, well tax in Ireland is lower, so I will pay Irelands tax rate instead, because it is cheaper. Not only that but Ireland get the benefit of the money they get from the tax paid, and not NZ inc. I always think of the tax I pay, as my contribution to NZ inc, to keep it running. It is like insurance too, incase you need a helping hand by the sate for health or other needs. If everyone paid their fair share of tax, we wouldn't have the need for charities, life saving drugs would be funded, and education would likely all be funded, without the need to get a loan. Unfortunately a lot of NZs economy is now being funded by cheap debt, to overseas countries.

 

 

 

 

Comparing corporations and private citizens are also two totally different things....






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  Reply # 1566894 7-Jun-2016 09:53
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Geektastic:

 

mattwnz:

 

UHD:

 

I think an international corporation has the right to arrange its affairs in such a way as to minimise their tax burden within the law. This is the same as any of us shopping around to minimise the cost of a new smart phone or groceries.

 

 

 

 

Comparing Tax and shopping for a commodity like a phone, are two totally different things. NZers can't shop around for the best tax deal. You have to pay the IRD your tax, you can't say, well tax in Ireland is lower, so I will pay Irelands tax rate instead, because it is cheaper. Not only that but Ireland get the benefit of the money they get from the tax paid, and not NZ inc. I always think of the tax I pay, as my contribution to NZ inc, to keep it running. It is like insurance too, incase you need a helping hand by the sate for health or other needs. If everyone paid their fair share of tax, we wouldn't have the need for charities, life saving drugs would be funded, and education would likely all be funded, without the need to get a loan. Unfortunately a lot of NZs economy is now being funded by cheap debt, to overseas countries.

 

 

 

 

Comparing corporations and private citizens are also two totally different things....

 

 

Really?

 

Every dictionary definition of "corporation" seems to begin with the following:

 

A corporation is a company or group of people authorized to act as a single entity (legally a person) and recognized as such in law.


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  Reply # 1566895 7-Jun-2016 09:53
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mattwnz:
joker97: Why is our tax so high?


It could be lowered if everyone paid their fair share of taxes. I wonder if NZ reduced the company tax rate to slightly below Irelands, whether we could entice these overseas countries to based their headquarters for tax, in NZ. That could be a solution for NZ, but may annoy a lot of other countries.

 

 

 

Ireland has the advantage that they are in the EU


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