Jenee Tibshraeny: NZ Herald Wellington business editor on whether we can expect changes to corporate tax rates

The Government is talking up the fact it’s exploring ways of making the tax system more business-friendly, with details of potential changes to be unveiled at the May 22 Budget.

Finance Minister Nicola Willis is wary that at 28 percent, New Zealand’s corporate tax rate is above the OECD average of 24 percent.

NZ Herald Wellington business editor Jenee Tibshraeny speculates what the Government might be planning ahead of this year's Budget.

LISTEN ABOVE

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:00):
Right. Nikola Willis has spent the past three days hinting
at changes to company taxes. It all started when I
asked her about it on Monday.

Speaker 2 (00:08):
We're not as competitive as we used to be. We
can't take tax off the table because it could make
a difference to our competitiveness. We always have to balance
that against our other pressing needs.

Speaker 1 (00:19):
We are at twenty eight percent, Singapore is at seventeen,
and Ireland, which we love to compare ourselves to, at
eleven and a half percent. From memory. Since then, the
Finance Minister has been leaving a few more clues in
Jane tips Trainey is The Herald's Wellington business editor. She's
with me tonight, good evening.

Speaker 3 (00:36):
Evening, Ryan.

Speaker 1 (00:37):
What else has the Finance Minister been saying?

Speaker 3 (00:40):
Well, I had a chat to Nichola Willis after you did,
and I asked her about the foreign Investment fund tax regime.
Now this sounds awfully dry and boring, but the Inland
Revenue has actually been consulting on tweaking this. These tax rules. Now,
these tax rules mean that if you have more than
fifty thousand dollars invested in offshore entities and companies and

(01:04):
shares you could be penalized with the way you have
to pay tax. So rather than pay tax on the
dividend income that you receive, you pay tax on a
certain portion of what your investment is worth. So it's
a bit like a wealth tax. You know, you pay
tax on the value of the investment, even if you're
not actually getting any money from that investment. Now, the
concern among some people is that that rule could deter

(01:29):
wealthy migrants from staying in New Zealand. All Kiwis who
have earned lots of money overseas and invested overseas from
returning back here, you know, because migrants are more likely
to have more money invested overseas, and if the tax
burden on them is you know, fairly heavy handed due
to these rules, then that could cause them to leave.

(01:50):
And you know, same with kis. If they have a
bunch of money invested in offshore companies, that could prevent
them from from coming back to New Zealand. Now there's
a bit of it.

Speaker 1 (01:58):
Yeah, really interesting point. I mean, as you say, fifth,
we haven't heard much about fifth, but for those people,
it would be hugely beneficial if the rules were to
be changed.

Speaker 3 (02:10):
Yeah, for sure, And I mean, it's a tricky one
because for a lot of people you might be thinking, well,
if you have more than fifty thousand dollars invested offshore,
then you know you don't really need a tax break.
You know, you're probably doing okay. But if the government
does want to attract wealthy foreigners to New Zealand, which
it says it does, then this is something that could

(02:31):
be changed now. I talk to Robin Walker, who's a
Deloitte tax partner, and she said it could be changed
so that you actually just pay tax on the income
you receive rather than paying tax on a certain portion
of your investment. Nikola Willis said that she was receptive.
That was a word, receptive to hearing concerns and possibly

(02:52):
making a change. I believe a whole bunch of people
have actually submitted to the ID on this, so it's
definitely a live issue.

Speaker 2 (03:00):
Yeah.

Speaker 3 (03:00):
The Finance Minister also spoke to me a little bit
about potentially phasing in any tax changes. So she said
that she should make announcements at the budget on May
twenty second, and she suggested whilst she wanted to look
at some tax settings in the here and now, there
could also be some phasing, so you know, I'm reading

(03:21):
into I'm reading into it a lot, but that could
suggest she might they might signal something at the budget
but only implement it in the future, because of course,
you know, the books are not in good shape, and
they'll be cognizant that if they're providing any tax breaks,
then you know, will that actually generate enough economic growth
and then enough additional tax revenue to not put the

(03:43):
books further in the read And.

Speaker 1 (03:44):
It's how quickly that can happen too, isn't it. Janay,
thank you very much for that excellent reporting. Jane hips Trainey,
who's with us in New Zealand Herald Running and Business editor.
For more from Heather duplessy Ellen Drive, listen live to
news talks. It'd be from four pm weekdays, or follow
the podcast on I Hard Radio