Latest / Best of Business / Jenee Tibshraeny: NZ Herald Wellington business editor on whether we can expect changes to corporate tax rates

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Jenee Tibshraeny: NZ Herald Wellington business editor on whether we can expect changes to corporate tax rates · Best of Business

• 0:09
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  Speaker 2: Right.
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  Speaker 3: Nikola Willis has spent the past three days hinting at
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  Speaker 3: changes to company taxes. It all started when I asked
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  Speaker 3: her about it on Monday.
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  Speaker 4: We're not as competitive as we used to be. We
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  Speaker 4: can't take tax off the table because it could make
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  Speaker 4: a difference to our competitiveness. We always have to balance
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  Speaker 4: that against our other pressing needs.
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  Speaker 3: We are at twenty eight percent, Singapore is at seventeen,
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  Speaker 3: and Ireland, which we love to compare ourselves to, at
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  Speaker 3: eleven and a half percent. From memory. Since then, the
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  Speaker 3: Finance Minister has been leaving a few more clues in
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  Speaker 3: Janee Tips Trainey is The Herald's Wellington business editor. She's
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  Speaker 3: with me tonight, good evening.
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  Speaker 2: Evening, Ryan.
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  Speaker 3: What else is the Finance Minister been saying?
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  Speaker 2: Well, I had a chat to Nichola Willis after you did,
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  Speaker 2: and I asked her about the foreign Investment fund tax regime.
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  Speaker 2: Now this sounds awfully dry and boring, but the Inland
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  Speaker 2: Revenue has actually been consulting on tweaking this. These tax rules.
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  Speaker 2: Now these tax rules mean that if you have more
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  Speaker 2: than fifty thousand dollars invested in offshore entities and companies
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  Speaker 2: and shares, you could be penalized with the way you
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  Speaker 2: have to pay tax. So rather than pay tax on
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  Speaker 2: the dividend income that you receive, you pay tax on
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  Speaker 2: a certain portion of what your investment is worth. So
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  Speaker 2: it's a bit like a wealth tax. You know, you
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  Speaker 2: pay tax on the value of the investment, even if
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  Speaker 2: you're not actually getting any money from that investment. Now,
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  Speaker 2: the concern among some people is that that rule could
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  Speaker 2: deter wealthy migrants from staying in New Zealand. All Kiwis
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  Speaker 2: who have earned lots of money overseas and invested overseas
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  Speaker 2: from returning back here, you know, because migrants are more
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  Speaker 2: likely to have more money invested overseas, and if the
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  Speaker 2: tax burden on them is you know, fairly heavy handed
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  Speaker 2: due to these rules, then that could cause them to leave.
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  Speaker 2: And you know, same with was if they have a
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  Speaker 2: bunch of money invested in offshore companies, that could prevent
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  Speaker 2: them from from coming back to New Zealand. There's a
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  Speaker 2: bit of it.
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  Speaker 3: Yeah, yeah, it's a really interesting point. I mean, as
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  Speaker 3: you say, fifth, we haven't heard much about fifth, but
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  Speaker 3: for those people it would be hugely beneficial if the
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  Speaker 3: rules were to be changed.
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  Speaker 2: Yeah, for sure. And I mean it's a tricky one
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  Speaker 2: because for a lot of people you might be thinking, well,
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  Speaker 2: if you have more than fifty thousand dollars invested offshore,
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  Speaker 2: then you know, you don't really need a tax break.
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  Speaker 2: You know, you're probably doing okay. But if the government
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  Speaker 2: does want to attract wealthy foreigners to New Zealand, which
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  Speaker 2: it says it does, then then this is something that
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  Speaker 2: could be changed.
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  Speaker 3: Now.
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  Speaker 2: I talk to Robin Walker, who's a Deloitte tax partner,
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  Speaker 2: and she said it could be changed so that you
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  Speaker 2: actually just pay tax on the income you receive rather
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  Speaker 2: than paying tax on a certain portion of your investment.
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  Speaker 2: Nikola Willis said that she was receptive, that was a word,
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  Speaker 2: receptive to hearing concerns and pop making a change. I
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  Speaker 2: believe a whole bunch of people have actually submitted to
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  Speaker 2: the IID on this, so it's definitely a live issue.
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  Speaker 4: Yeah.
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  Speaker 2: The Finance Minister also spoke to me a little bit
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  Speaker 2: about potentially phasing in any tax changes, so she said
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  Speaker 2: that she should make announcements at the budget on May
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  Speaker 2: twenty second, and she suggested whilst she wanted to look
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  Speaker 2: at some tax settings in the here and now, there
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  Speaker 2: could also be some phasing. So you know, I'm reading
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  Speaker 2: into I'm reading into it a lot, but that could
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  Speaker 2: suggest she might they might signal something at the budget
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  Speaker 2: but only implement it in the future, because of course,
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  Speaker 2: you know, the books are not in good shape and
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  Speaker 2: they'll be cognizant that if they're providing any tax breaks,
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  Speaker 2: then you know, will that actually generate enough economic growth
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  Speaker 2: and then enough additional tax revenue to not put the
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  Speaker 2: books further in the read.
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  Speaker 3: And it's how quickly that can happen to, isn't it. Janay,
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  Speaker 3: Thank you very much for that excellent reporting. Jane Chipstraeney,
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  Speaker 3: who's with us in New Zealand Herald Running and Business.
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