Bucking the trend of most countries around the world, New Zealand small to medium enterprises (SMEs) are extremely comfortable with New Zealand tax policy and the tax risk on their companies.
In the latest Grant Thornton International Business Report (IBR) survey, New Zealand was only headed by Sweden out of 33 countries concerning the levels of comfort SMEs had with tax policy and tax risk.
In New Zealand, 26% of companies saw tax policy and tax risk as a high priority and 40% as a low priority with the remaining 34% not seeing it as a priority at all. Compare this with key economies such as Japan (97%), Indonesia (90%), Germany (84%), the United Kingdom and the United States (79%) and China (66%).
Greg Thompson, Partner and National Director, Tax, at Grant Thornton New Zealand, said that this level of comfort was because of the stability and relative transparency of our tax system.
“On an international scale Grant Thornton has been tracking business sentiment on the need for more transparency in tax planning since news surrounding the tax practices of large multi-nationals such as Amazon, Google and Starbucks broke last year and the message coming from overseas is that business leaders want things in black and white.
“Our tax system is more black and white when compared to other jurisdictions, as indicated by this survey, and while our SMEs are painting a pretty rosy picture at present, there is a global push for change.
“Up to now there has been a lot of chat and not much action, but the G20 summit in Brisbane later this year has already made promises about wide reaching changes as a step towards getting a global agreement on tax planning and tax rules.
“These will have an impact on New Zealand business and leave a number of questions to be answered. Are New Zealand SMEs really on top of their tax requirements as indicated by this survey or is there a degree of naivety that will soon get a shake up?
“Utterances from the G20 are one thing, turning them into action is another. If we use climate change negotiations as a guide, then New Zealand SMEs may not have to get off their hands for some time to come. This sentiment is further supported by the latest survey which indicated only 26% of respondents were confident that international agreement could be obtained on the proposed changes.
“And of course, there are looming elections where tax is getting an airing. Whatever the outcome there will be change, but that’s in the future,” Greg Thompson said. “In the meantime there are more important issues for businesses than tax, for a change.”
