Latest / Early Edition with Ryan Bridge / Geof Nightingale: Independent Tax Expert on the impact of higher taxes on multinational tech companies like Google, Meta

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Geof Nightingale: Independent Tax Expert on the impact of higher taxes on multinational tech companies like Google, Meta · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: The issue of big tech companies like Meta and Google
• 0:04
  Speaker 1: and Amazon not paying their fair share has come to
• 0:07
  Speaker 1: light again. A new report points out that the bloodline
• 0:10
  Speaker 1: of New Zealand subsidiaries making large payments to offshore affiliates
• 0:14
  Speaker 1: labeled as service fees as a bit of a rought,
• 0:17
  Speaker 1: withholding tax of just five percent, could bring an extra
• 0:19
  Speaker 1: one hundred and thirty million dollars in revenue to the
• 0:21
  Speaker 1: country if we did that. And Jeff Nightingale is an
• 0:24
  Speaker 1: independent tax expert and joins it now I'm morning to.
• 0:26
  Speaker 2: You, Jeff, Good morning Andrew.
• 0:29
  Speaker 1: My question has always been how did we let big
• 0:31
  Speaker 1: tech get away without paying tax in the first place.
• 0:33
  Speaker 1: I mean, you know, they're not breaking the law, they're
• 0:36
  Speaker 1: just following the code we set them.
• 0:39
  Speaker 2: Yeah, that's that's right. So that's a very important point.
• 0:42
  Speaker 2: They're not breaking them all. But the question that the
• 0:45
  Speaker 2: report raises is the law currently correct and does that
• 0:48
  Speaker 2: result in the correct results for the New Zealand economy.
• 0:52
  Speaker 2: And the tax is pretty low, But the problem is
• 0:56
  Speaker 2: is that they the big tech companies, they're using a
• 0:59
  Speaker 2: tax system, an international tax system that has been designed
• 1:03
  Speaker 2: over the last hundred years, over one hundred years ago
• 1:06
  Speaker 2: that deals with sort of exports of goods and manufactured
• 1:09
  Speaker 2: goods and things, and doesn't really cope with what I
• 1:12
  Speaker 2: call digital weightless services. And so that's really the problem,
• 1:16
  Speaker 2: and that's given quite low levels of tax compared to
• 1:19
  Speaker 2: their turnover.
• 1:19
  Speaker 1: Are these service fees I mentioned dodgy.
• 1:23
  Speaker 2: No, they're not dodgy. They are the way that the
• 1:27
  Speaker 2: intellectual property is valued and paid for under our arms
• 1:33
  Speaker 2: length alls. So we have all these rules that say,
• 1:35
  Speaker 2: if you're trading with yourself across international borders, you've got
• 1:38
  Speaker 2: to do it on an arms links basis. And that's
• 1:40
  Speaker 2: the result they're giving. And the question the report's raising
• 1:43
  Speaker 2: and saying is that the right result? And there are
• 1:46
  Speaker 2: more complexions to it. Even if we could tax them more,
• 1:49
  Speaker 2: there's a real issue about whether we should tax them more.
• 1:53
  Speaker 1: It's another report that points out the problem very very well,
• 1:56
  Speaker 1: but does it offer any answers and are there any answers?
• 2:00
  Speaker 2: Well, there are answers the report suggests withholding tax. But
• 2:03
  Speaker 2: there's two risks with that approach. The first is that
• 2:07
  Speaker 2: we have in power in the US the Trump administration,
• 2:10
  Speaker 2: who has proven one hundred percent that they will retaliate
• 2:14
  Speaker 2: with tariffs on our export good. We already are being
• 2:17
  Speaker 2: hit with fifteen percent, but if we were to try
• 2:21
  Speaker 2: and tax the US digital giants more, it is highly
• 2:25
  Speaker 2: likely that we would get an increased tariff response. So
• 2:27
  Speaker 2: the question would be more taxes to New Zealand, but
• 2:30
  Speaker 2: higher tariffs on our exports. What's the right answer. That's
• 2:34
  Speaker 2: the first problem. The second problem is it's not clear
• 2:37
  Speaker 2: whilst you might collect the tax off the multinationals, they're
• 2:41
  Speaker 2: likely to pass it on to New Zealand businesses and
• 2:43
  Speaker 2: eventually consumers. So the economic incidents, who pays the tax,
• 2:48
  Speaker 2: who bears the cost shifts through to the consumers, so
• 2:50
  Speaker 2: we don't actually get it off them anyway.
• 2:52
  Speaker 1: It's a fine pickle and thank you so much for
• 2:54
  Speaker 1: your time. Jeff Nightingale, independent tax expert.
• 2:58
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• 3:01
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• 3:02
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• 3:05
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