7. Tax Avoidance—Multinational EnterprisesFLETCHER TABUTEAU (NZ First) to the Minister of FinanceTax Avoidance—Multinational Enterprises7. FLETCHER TABUTEAU (NZ First) to the Minister of Finance: Does he think it is acceptable that 20 multinational companies paid just $1.8 million in income tax in 2014 despite recording nearly $10 billion in annual sales in New Zealand?Hon BILL ENGLISH (Minister of Finance): As I think the member is aware we do not tax turnover in New Zealand so it is a bit hard to know. It is possible that the levels of tax are lower than they should be. We expect multinationals to pay their fair share of tax and be good corporate citizens. Most companies play by the rules but the Government is continuing to tighten up the rules around transfer pricing and interest deductibility. New Zealand continues—most importantly in my view—to work with other OECD countries to strengthen international tax settings because in some respects what is most concerning about some multinationals is that they do not appear to pay much tax anywhere. We need to work with other countries to make sure that they pay their fair share as appropriate to each country's rules.Fletcher Tabuteau: Given that he just stated that he believes in a fair and equitable tax system does he think it right that MasterCard New Zealand declared revenue in New Zealand of just $4.5 million and paid tax of only $71000 in its latest figures despite sharing evenly in $40 billion of annual credit card billings? Hon BILL ENGLISH: I would have just the same questions as the member. In the first case we need to ensure that MasterCard follows New Zealand law because if it does not it would be subject to sanctions. Secondly we need to ensure that New Zealand law is structured in a way that maximises the reasonable tax take. Probably most importantly we need to work with other countries to ensure that MasterCard pays its fair share of tax wherever it goes. The fact is to the extent that New Zealand acts alone companies are free to just shift their tax burdens to other places and it does not make much difference.Fletcher Tabuteau: Given his answer does he think it right that Visa New Zealand shared in the same pool of credit card billings of $40 billion and it declared only $3.2 million of revenue and paid only $185000 in tax in its latest figures?Hon BILL ENGLISH: Can I say to the member that outrage does not fix the problem. This is a matter of New Zealand tax law and how it interfaces with international tax law. The way we proceed on that needs to keep in mind one factor the member has not mentioned and that is that if a very successful New Zealand company like Xero for instance has hundreds of millions of dollars' worth of sales in Australia but has no taxable profit we do not actually want the Australian Government just arbitrarily deciding to tax them. So we have to keep in mind that whatever treatment we applied here will be applied to New Zealand companies overseas. That is why we work with other countries to try to make it fair.Fletcher Tabuteau: Does he agree that the Government should make applications from major offshore investors buying New Zealand assets or investing here explicitly conditional on paying their fair share of tax?Hon BILL ENGLISH: That is the requirement of New Zealand—Hon Member: But it worked with other countries though.Hon BILL ENGLISH: Well you could put it in but it is actually the requirement of New Zealand law. If they operate here—[Interruption]—well even if they do not think it is fair they have to pay the tax obliged for them to pay by New Zealand law. So we either change the law which the Government—[Interruption]Mr SPEAKER: Order! There is little point—[Interruption] Order! I am sorry to interrupt the Minister but there is little point continuing with an answer with that sort of behaviour from New Zealand First.Ron Mark: I raise a point of order Mr Speaker. We were applauding the Minister's wonderful statement and we would like to hear the end of it.Mr SPEAKER: Order! I am not interested in hearing any more. This is question time. It is not about behaviour you would see at a rugby stadium.Fletcher Tabuteau: Supplementary question Mr Speaker.Mr SPEAKER: Has the member got a further supplementary question?Fletcher Tabuteau: I do indeed.Mr SPEAKER: Well I hope this time your own caucus colleagues will respect the answer that is given.Fletcher Tabuteau: How will the Minister help many New Zealand companies that have said that they have missed out on investments here at home because overseas competitors are abusing the tax system here in New Zealand giving them an unfair advantage over Kiwi firms?Hon BILL ENGLISH: The way we would help those firms is if they have any knowledge that would indicate that overseas firms are not complying with New Zealand tax law then those companies will be pursued and if they have not kept the law they will be prosecuted. The way the member can help those companies is to support the Government measures to deal with the complex issues of international tax where we are tightening up for instance transfer pricing interest deductibility rules and the use of hybrid financing instruments. I would expect New Zealand First to support those measures because they are all aimed at just the problem that the member and I believe can be mitigated to some extent.