Goldsmith PaulHon PAUL GOLDSMITH (National): Thank you Madam Assistant Speaker and my pleasure to speak on this bill the Taxation (Neutralising Base Erosion and Profit Shifting) Bill which is one that was introduced by the previous National Government under the tax leadership or the leadership of the revenue portfolio of Judith Collins and is being carried on in the new dispensation that we find ourselves in by the Labour Government.Broadly speaking we remain supportive of the thrust of this bill which fundamentally is trying to deal with that tension that we face—and that all countries face in the globalised world—of wanting to ensure that international businesses pay their fair share of tax. And so if you're a multinational company based in New Zealand selling for example pharmaceuticals or something like that and you're making profits in this country we want to ensure that that profitability is accurately described and taxes paid for it. As long as companies have been trading across borders there have been ways and means and efforts to reduce the amount of tax paid in countries where tax rates are relatively high and profits shifted to places where tax rates are low in order to avoid paying tax. Naturally we like every country in the world have tried to resist that urge.As a small economy such as New Zealand we've always been conscious of the fact that it's not something that we can fix on our own and that we're far better to work with and through multinational organisations to achieve this. And so the OECD of which New Zealand is a member based in Paris has been working in this tax area for a long time and as the Minister has acknowledged New Zealand has had a long and proud tradition of having a very constructive role in those discussions. And so this bill flows out of the recommendations of the OECD working groups in order to try and defeat that. Now the tension also arises though between—while we're wanting to ensure that international businesses pay their fair share of tax we also want to have multinational companies investing in New Zealand and trading in New Zealand so that New Zealand has access to the goods and services they provide and so that we can enjoy the many many benefits of having multinational companies actively engaged in this country not just in terms of doing business but also from the management experience and the many many benefits that you get from having branches of multinational organisations based in this country and investing in this country.So we want to ensure that the tax rules that are developed are not unduly hostile to that happening. We acknowledge that if you live in a world where people are making decisions in Singapore or Shanghai or New York or London about where to invest as a company and where to trade as a company it's not automatic that New Zealand has to be at the top of the queue and that we have to be attractive. The after-tax returns are obviously what companies look at and so a certain measure of predictability about the tax that they're likely to pay and the effective rate of that tax according to the rules that apply is very important. So what we've tried to achieve here in this legislation is to try and sort of get an effective line between those things—you know wanting to make sure that the proper amount of tax is paid and that the system is robust and at the same time not being arbitrary and unpredictable and excessively tight in the way that we gather that tax.As we've seen over the very lengthy and detailed debate that we had in the committee stage there are lots of fine arguments to be had around the particulars. The basics of the measures of this bill are around stopping foreign parents charging their New Zealand subsidiaries a high rate of interest to reduce their taxable profits in New Zealand. The basic sort of dynamic there is that if a multinational company bases a parent company in a subsidiary in New Zealand loads it up with debt and then charges a high rate of interest for that debt then the New Zealand company trading in New Zealand will post a very small profit even though it might actually be very profitable on its trading and therefore pay very little tax in New Zealand. The tax is paid instead where the interest is gathered. If that's in a low-tax regime then overall they pay less tax but the New Zealanders receive less out of it. I suppose the broader point I'd make in all of this—and I won't go too deep into the details of this bill—is to contrast I suppose the process that we've had in the construction of this legislation. It may not prove to be perfect and no tax legislation ever is and I won't be at all surprised if we come back in the not-too-distant future re-examining some of these decisions that we've made and asking if we've got the balance right. But at least we've had a process where we've spent a considerable amount of time working out what we've tried to achieve. There has been detailed advice come in from officials about what we're trying to achieve; then there's been a large and considered select committee process and changes have been made as a result of that select committee process which has had the feedback of the many hundreds of practitioners in this space in New Zealand and internationally and we've adjusted the legislation to get the best result that we can.Unfortunately that is proving to be not always the case in the way this Government goes about its business. The most striking contrast of course is with the oil and gas decision that was made in the absence of any detailed analysis by officials by arbitrary ministerial fiat and not actually going through Cabinet let alone the legislative processes that may well be taken. Then we're seeing in many other parts of the business community—if we're looking at industrial changes legislation for example—a determination on the Government to do very significant things but an unwillingness to listen to the businesses that are most affected by that when they raise realistic concerns about the costs that are being imposed on business. I just wish that we translated the tax development process that has been a relatively bipartisan one over many many years in this Government and a well-known and proven track record of developing legislation and actually getting meaningful engagement with practitioners in the field—I just wish that we applied a similar level of rigour and analysis in research and a genuine listening and engaging with stakeholders most directly affected and an attempt at some bipartisanship over the political debate. If we applied that in the fields of industrial relations or in economic development or the foreign investment rules for example or in the many other areas where this Government is going out and making very substantial changes in a seemingly arbitrary sense and not meaningfully listening and engaging with the broader business community I'd think we'd be in much better shape than we are at the moment. We wouldn't be seeing what we are seeing right now which is falling business confidence right across the country. So I suppose it's a bit of a message of This is a pattern that the Government would be well advised to follow in the broader way that they go about their business." And I only wish that they would. So I just encourage the next speaker and the many Government speakers that will follow to reflect and consider the way that tax legislation is being developed and apply that more broadly in the way that the Government goes about its business. Thank you very much."