Shaw James: Oral Questions — Questions to MinistersText is incorporated into the Bound VolumeShaw James: Oral Questions — Questions to Ministers[Sitting date: 04 May 2016. Volume:713;Page:10744. Text is incorporated into the Bound Volume.]3.JAMES SHAW (Co-Leader—Green) to the Minister of Revenue: Will he follow the lead of the Australian Government and introduce new measures in the upcoming Budget to ensure multinational corporations pay their fair share of tax?Hon MICHAEL WOODHOUSE (Minister of Revenue): While the details of Australia’s measures are still being analysed New Zealand does not need to wait for Budget 2016 to implement multinational tax avoidance initiatives because we already have an ongoing baseerosion andprofitshifting programme. We have implemented a number of initiatives such as strengthening the thin capitalisation and non-resident withholding tax rules and introducing GST on cross-border services and intangibles. Our tax policy work programme includes a number of measures that are actively being developed and should be implemented within the next 12 months.James Shaw: How many additional staff will the Inland Revenue Department (IRD) get to work on tax avoidance in this year’s Budget given that they currently do not have enough resources to work on reforming foreign trust regulation?Hon MICHAEL WOODHOUSE: As to the second part of that question it is not a matter of having enough resources. Tax policy is like drinking from a firehose: there is always more than we can do. Last year in Budget 2015 we put a significant amount of resource into the IRD to do just this work and other domestic tax avoidance measures and they are paying very strong dividends.James Shaw: Does he stand by his statement on TV yesterday that when his office went to the IRD and said “Of your current programme of work which projects would you drop in order to fit in a review of foreign trust regulation?” it came back and said “None.”?Hon MICHAEL WOODHOUSE: Yes and in particular the prefacing comment to that which was that the IRD has an obligation to make sure that its focus is on things that maintain and increase the New Zealand tax base. The foreign trust review would not have done that and it was in that context that the previous Minister asked what it would be prepared to drop—those things that would enhance the New Zealand tax base—and it said “None.”James Shaw: Does he stand by his statement “if you’re asking me if New Zealand is missing out somehow I have seen no information to suggest that that is the case.” given that tax expert Professor Craig Elliffe estimates that New Zealand is losing a billion dollars a year from multinational tax avoidance?Hon MICHAEL WOODHOUSE: Yes I do because I also then went on to say that we will be continuing to turn over every stone to ensure that anti-avoidance provisions are being followed and working in concert with the OECD they will be enhanced. As for Mr Elliffe’s estimate it was simply that: a finger in the air with no foundation in reality.James Shaw: I seek leave to table the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations report first published in 1979.Mr SPEAKER: On the basis that it was some time ago I will put the leave. Leave is sought to table that OECD report. Is there any objection to it being tabled? There is none. It can be tabled.Document by leave laid on the Table of the House.James Shaw: Given that the OECD has been working on addressing multinational tax avoidance since 1979 in what year does he expect it to complete its work and for New Zealand to start taking action?Hon MICHAEL WOODHOUSE: I reject the implication in the question that New Zealand is not taking any action. As I say tax policy work is an ongoing stream of work that we will continue to do. We are working very closely with the OECD and I expect there to be much more to be done over the next 12 months.James Shaw: Why is tax avoidance the one area where we are not trying to harmonise our regulations with Australia?Hon MICHAEL WOODHOUSE: Well the issue of harmony—I would reverse the comment. It is Australia that is now potentially out of step with the rest of the world by its announcement on the diverted profits tax regime. I have not seen any comments on Australia’s announcement but when the United Kingdom did the same thing late last year the OECD sent a directive for the Centre for Tax Policy and Administration saying that unilateral actions are not exactly in the sense of what the OECD is trying to do. Unilateral measures are not that great when you are negotiating a multilateral package.James Shaw: What does he have to say to New Zealand businesses that will continue to pay their fair share of tax after Budget 2016 while multinational companies that are operating here will continue to be allowed to avoid it?Hon MICHAEL WOODHOUSE: No taxpayer is allowed to illegally avoid the payment of their tax obligations. We are continuing to make sure that the transfer pricing rules the thin cap rules and other measures to avoid multilateral tax avoidance are being followed. But as the Minister of Finance repeatedly says to the extent that these companies are not paying tax in New Zealand they are not paying tax anywhere in the world. This is a global problem that requires a global solution.