Allan KiritapuKIRITAPU ALLAN (Labour): Unlike the opposite side of this House Madam Assistant Speaker I believe that it's an obligation we owe our citizens to duly stand and speak to these issues of substance that are going through this House because these are in fact the issues that shape our nation.Before I turn to commence my more formal remarks I did just want to pick up on a couple of points. I notice that the Opposition—or some of the Opposition—keep erroneously referring to the bill as the Taxation (Neutralising Base Erosion and Profit Sharing") Bill. But if these multinational corporations were actually sharing the profits domestically there would actually be no need for this bill at all. Sir—Madam Assistant Speaker; my apologies Madam Assistant Speaker you don't look anything like a sir. You know the issue here is that there has been no sharing by these multinational corporations of the fair just and equitable input that there should have been into our local economy because it is in fact being shifted and shifted overseas.Reflecting on the actual real-life implications of this type of legislation for folks up in the regions I saw there was a chap by the name of John Russell from my friend Willow-Jean's electorate up there in Kawakawa—81 years old he's been taxed about 40 million bucks per annum. He's doing great things up there. In contrast you have multinational corporations like that of Apple as my colleague the Hon James Shaw mentioned before. Their sales exceed 550 million bucks here domestically but they're paying less than 10 million bucks to the taxman and the taxman indeed makes sure that we have the things that we need as communities to thrive and survive like schools and healthcare systems and whatnot—but when they don't pay their fair share and it's lumped on the guys like Mr John Russell who is 81 years old up there in Kawakawa to come up with these gross amounts of tax when there hasn't been a real contribution by all of those that I guess are taking the liberties of operating their companies within our domestic economy that is indeed a cause of concern.The debate around profit shifting is a global debate. This Taxation (Neutralising Base Erosion and Profit Shifting) Bill is New Zealand's domestic remedy to I guess give effect to the multilateral agreement that was signed earlier this year. I do want to just commend the intentions of both sides of the House for trying to get our tax system right. I think we can all agree—whatever side of the House you're on—that whoever is operating their company that is not necessary domicile but is operating and is taking a fair chunk of New Zealand residents' cash they too should actually be required to pay their fair share. The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting the multilateral instrument signed earlier this year was indeed I guess the global solution that this bill then gives the domestic effect to.If you go to the guts of it this bill's all about fairness—it's just basic stuff. Yeah it's just about fairness. We know that right now—I mean there are different numbers that have been cited. Globally they're saying that there's in excess of about 770 billion bucks—that is tax moneys that are not being appropriately accorded to the right domestic residence. Locally the figure domestically ranges anywhere from a couple of hundred million through to the $1 billion figure that's been cited previously in this House. A billion bucks gives my colleague here the Hon Shane Jones $1 billion to plant his one billion trees and—Hon Shane Jones: Trees! Trees! Mānuka!KIRITAPU ALLAN: Mānuka which creates jobs and so on and so forth. This bill—this tax bill—is not a demonstrable reform of our entire tax system but we're seeing a number of reforms across the bridge. Madam Assistant Speaker I believe this is a split call so I'd better not go on and on but I just do want to say—Hon Dr Megan Woods: Go on.Hon Kris Faafoi: Keep going.KIRITAPU ALLAN: I will keep on going because that is important that I keep on going—it is. All right excellent. There we go all right. So not only does this bill increase fairness—Hon Kris Faafoi: You've only just started.KIRITAPU ALLAN: That's right. I'm just winding up. Just you guys wait. Ha! This is about protecting our tax base—about strengthening our tax base. Unlike the previous Government—I think in the period of 2013 to 2014 the Ministry of Social Development spent over $40 million hounding down those deviant dole bludgers that had not paid their tax—and I think they recouped about 20 million bucks. Meanwhile you had multinational corporations that we knew were rorting the system for over a billion dollars in revenue that wasn't coming back to New Zealand domestically. I mean it's tricky. We know it's hard. We know it's hard to trace multinational corporation dollars. But this Government they decided to pursue the little guys pursue the poor guys—pursue the guys that were on the edge barely making ends meet. Meanwhile multinational corporations are operating domestically and completely rorting us while we all sort of sat on our hands and we knew it.So yeah the debate around profit shifting: it has been globally recognised since 2012. I just want to say—and the prior speaker the member Lawrence Yule he'll know this having been in local government for many many years—that when issues are raised it's only good government to act. Now this Government had five years and sat on their hands—five years since 2012; 2012 was when the debate started. In 2013 the report came out. Five years sitting on your hands; meanwhile we're letting the multinational corporations run a rort and do what they do. This Government was actively pursuing the beneficiaries trying to recoup some cash and to sell it to the general populace that you're doing a great thing because you're chasing down those law breakers. But the reality is it's just easier—it's easier—to chase down the little guys that are breaking the law for you know not paying their fair share when it comes to being on a benefit but it's a lot tougher tracing down multinational corporations that have sophisticated global operationsLawrence Yule: You have to change the law.KIRITAPU ALLAN: Yeah and collectively I'm really proud that the Hon Stuart Nash from your region—must be a Hawke's Bay thing to be very impassioned about tax and revenue. It's impressive. I'm really fortunate and glad that the Hon Stuart Nash is actually introducing the Taxation (Neutralising Base Erosion and Profit Shifting) Bill. In effect it does require four things from multinational corporations: that they pay their fair share of tax by strengthening the interest limitation rules—and those are effectively interest payments on debt as an expense to a company which is deductible therefore a New Zealand - based foreign-owned company can reduce its taxable income by borrowing from its foreign owner rather than issuing shares.The second thing that this bill does that we're really proud of is that it addresses permanent establishment avoidance. Other proposals in the bill address the ability for multinationals to structure their operations to avoid having a taxable presence—a permanent establishment if you will—so that they're not taxed on their sales in New Zealand. Well this bill proposes a new anti-avoidance rule for large multinationals. With over ₤750 million in EU turnover that will expand the criteria for a multinational to be considered to have a permanent establishment here in New Zealand.The third thing in terms of addressing permanent establishment avoidance: this bill also contains administrative measures that strengthen the Inland Revenue Department's powers to investigate those large multinationals that do not cooperate with a tax investigation. That's really been an issue for IRD and I think that we expect to hear substantive submissions on that in the Finance and Expenditure Committee.The third thing that this bill does is it strengthens the transfer pricing rules. Now transfer pricing involves the pricing of cross-border payments between related parties. Parties can shift taxable profits out of New Zealand—[Bell rung] Oh Madam Assistant Speaker look I was getting so riveted into the nuances and the effects of this bill that I just lost the time. I commend this bill to the House."