Nick Miller: International Tax Specialist on the report looking into taxing multinational corporations

There’s a view that large tech companies could be challenged to pay more tax.  

A report from tax expert Nick Miller says companies like Google take payments from a New Zealand subsidiary and then pay them to an offshore section of the business.   

These are listed as service or licence fees, but Miller says they could be seen as royalties, which come under a withholding tax.  

Miller says it's not just New Zealand having this issue.  

He says it's a debate Australia is having at the moment and one that New Zealand can't afford to sidestep. 

He told Mike Hosking we can learn a lot from what’s happening across the ditch, but if we want to obtain more tax from multinationals operating in New Zealand, our courts may have to reach a view on the issues. 

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Episode Transcript

Speaker 1 (00:00):
New report this morning into one of life's great conundrums,
how to get big tech to pay their so called
fair share of tax. Now we've blurred the lines of
New Zealand subsidiaries making large payments to offshore affiliates. This
is not new, of course, they call them service fees.
Nick Miller is the Authory's international text specialist in these
with us. Nick, morning to you, why won't that work?
There we go? Sorry, I got you now, without no

(00:21):
disrespect to you at all. This isn't new, is it.
I mean they've been paying service fees forever.

Speaker 2 (00:27):
They have been paying service fees for a long time.
That's right. But what the report, what our report seems
to do is is to now look at how we
can use existing legislation to challenge these service fees in
the wake of obviously the demise of the Digital Services Tax,

(00:48):
because obviously there's been a perception that these companies haven't
been paying enough tax. Otherwise why would we have had
the advent of the DST. So the report is trying
to shine a light in some detail on these techniques
and moving on to look at how we can use
existing legislation, existing principles to challenge these techniques and get

(01:13):
more tax.

Speaker 1 (01:14):
Important point you make existing would we need to change
the law, because presumably you could then ask the question,
if we don't need to change the law and can
use existing legislation, why isn't the IID already doing it.

Speaker 2 (01:26):
I don't think we would need to change the law,
and the report makes that clear. I think you'd need
to ask ir about that. But I guess if you
if you look back over the last up two or
three years, there's been a focus on the digital services
taps and potentially other multilateral solutions or potential multilateral solutions.

(01:47):
Now those that don't seem now likely to see the
life of day. So we are back. The issue hasn't
gone away. So we're back with how do we how
do we deal with this? How do we find a
way to challenge it?

Speaker 1 (01:59):
Do we have small countries syndrome? In other words, and
we go too hard, they're going to get pissed off
and go away.

Speaker 2 (02:07):
I doubt if that is the case, because if if
you look at the filings of these multinational groups, of
the global filings, that is, they're in dispute with with
many countries all around the world. So I don't think
we wouldn't be unique. And obviously if it's all what's
going on in Australia that the Australian Tax officers have

(02:29):
been involved in litigation and taking other measures, So so no,
we we would we would simply be fighting our own corner,
in common with a lot of other countries.

Speaker 1 (02:40):
Who does it will?

Speaker 2 (02:45):
I think the Australian Tax Office is big because they're
they're they're the closest, closest country to us. But also
they have I think had a had a pretty relentless
focus on this and on on on the subject of

(03:05):
for example, royalties. Can can we use our existing law
to impose with holding tax on royalties which which otherwise
reduce which reduced the profits in both Australia and New Zealand.
But I mean we should still forge our own path.
I think we can learn a lot from what's what's
going on over the ditch. But ultimately if we if

(03:30):
we want to obtain more tax from multinationals operating here,
then ultimately the New Zealand courts may have to reach
an interview on these issues.

Speaker 1 (03:40):
Do you have to test all right now? Nick appreciated
my last Prime Minister about it. On Monday actually Nick Miller,
International Tech Specialists with us this morning. Because of course
we all know that the I Idea have been shaking
the tree Philly hard, and they've got some new tach
and they're matching stuff up and they're bringing in more money.
So I don't know why they haven't gone down to
this particular path.

Speaker 2 (03:56):
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