New Zealand updates tax policy work plan

The New Zealand government on August 8 updated its tax policy work plan which reflects the government’s priorities in the field of taxation and its plan to achieve those objectives.

The revised tax policy work plan reflects New Zealand’s aim to encourage productive investment and ensure the tax system remains sound, Revenue Minister Stuart Nash said.

“We are committed to the fundamental principles of a broad-based, low-rate system,” Nash said

A related Inland Revenue release noted that there is growing public and government concern about the tax treatment of multinationals operating the digital sphere that earn income in New Zealand. The government has not made any decisions on whether to adopt a digital services tax; its preference remains a multilateral approach through the OECD, the release notes

The following tasks are enumerated in the tax policy work plan related to international tax:

• reporting back on the digital service tax discussion document;
• double tax agreement negotiations and assisting with free trade agreements;
• multi-lateral work (including the OECD working parties); and
• follow-on work to monitor and adjust the BEPS measures enacted last year

The release descrbe the other key workstreams as follows:

• Land
  Policy work will continue the review of current land rules, particularly affecting investment property and speculation, land banking, and vacant land. It will ensure that the current tax settings are fair and encourage investment where it is most productive. Enforcement of the current tax rules is also a priority.
• Business
  The government is focussed on ways to enhance economic performance and minimize the impact of the tax system on businesses. This includes the tax treatment of spending on innovation. It covers feasibility and blackhole expenditure, or capital spending that is not otherwise deductible.
  Work will also focus on minimizing compliance cost for businesses; and lifting the economic performance of all businesses, especially smaller firms and the self-employed. It also considers employment matters in the face of the changing nature of work.
• Infrastructure
  Infrastructure is a key area of interest for the coalition government. After nine years of neglect, the need to fix our public assets is a long-term challenge.
  This project will consider whether the tax system has a role in driving infrastructure investment. We are determined to reverse the current infrastructure deficit.  This work supports our drive for a more modern, sustainable, and climate resilient economy. It also contributes to unlocking the potential of our regions.
• Exemptions and charities
  We are driving a focus on consistency and coherence of our tax frameworks. This includes entities such as charities and businesses run for charitable purposes, as well as institutions like local authorities and state-owned enterprises. It is important that income tax exemptions and concessions are effectively targeted.
  The work program also includes a charities workstream. This work links to the charities project underway at the Department of Internal Affairs.
• Social policy
  This workstream supports the welfare overhaul, including reform of Working for Families, the student loan scheme, and KiwiSaver.

The tax policy workplan was last updated on May 17, 2018.