UPFRONT Taxing questions

Recent debate on lowering New Zealand’s corporate income tax rates gained some additional muscle from the release of KPMG’s latest annual survey of international tax comparisons. Drawing on findings in 86 countries, the survey includes summaries of tax regimes in the 30 member countries of the OECD (Organisation for Economic Co-operation and Development), the 25 European Union countries, 19 countries in the Asia Pacific region and similar number of nations in the Latin America region.
By and large, the direction is down, say the report’s authors. This leaves New Zealand – with its unchanged rate of 33 percent – lagging further behind its neighbours and competitors for foreign investment.
Top of mind for New Zealand companies, must be the 30 percent rate currently being enjoyed on the other side of the Tasman and prospects of lower corporate take should separate benchmarking study outline in sufficient strength the benefits of such move.
KPMG’s senior tax partner Brahma Sharma lost no time in pointing out the negative consequences to New Zealand business should we continue to resist lowering our tax rate.
The KPMG survey, which has been run every year since 1993, also points out that headline tax rates are not the only consideration for companies seeking low tax jurisdictions. “A low tax rate does not necessarily mean low tax burden,” it says. “Effective tax rates and the general business friendliness of country’s tax environment are also significant factors.”
The survey compares corporate income tax rates at January 1 this year with their equivalents year earlier.

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