Date posted: 08/11/2022

New Zealand Tax at the Crossroads

We spoke with Professor Craig Elliffe FCA, a leading tax practitioner on the upcoming 2022 International Tax at the Crossroads Conference and his view on NZ Digital Services Taxes in today’s context.

In brief

  • An interview with Professor Craig Elliffe FCA
  • What this year’s International Tax at the Crossroads Conference will look like
  • Challenges of the NZ digital services taxes

What benefits will the Tax Conference this year bring for NZ tax professionals?

The International Tax at the Crossroads Conference will be held at the Auckland Law School on 8-9 December 2022. 

It’s a good opportunity for New Zealand tax professionals to gain a good understanding and insight into what developments have occurred in international tax. The conference gathers together leading academics and practitioners, including  Philip Baker KC, Barrister at the Field Court Tax Chambers, Professor Reuven Avi-Yonah from the University of Michigan and many other experts from around the world. 

What are the key areas of content the conference will cover?

There are four significant areas of discussion:

The first is concerned with the overview of whether the new international tax rules are stable and effective. 

Secondly, we’ll have a good look at digital services taxes, contrasting the approach of the Canadians with other countries. 

Thirdly, we look at the developments on the multilateral solution to taxing highly digitalised businesses (pillar one) and its effectiveness and administrability.

Lastly, we look at the new proposals for a minimum global tax and ask questions about the implications for New Zealand and whether New Zealand should introduce a domestic minimum corporate income tax.

What do you think the main challenges of the NZ digital services taxes (DSTs) are?

Clearly the existing status quo, whereby multinationals can carry out significant business operations in New Zealand without paying tax is unacceptable. So the question is whether unilateral action or multilateral action is preferable. The challenge for a unilateral DST is the risk of trade/tariff disputes, as well as the possibility of legal challenges in the World Trade Organisation (WTO) and elsewhere.

What are the most important factors we should take into account when looking at NZ International Tax reforms?

I think New Zealand needs to remain open-minded in its international tax policy balancing the need to recognise that the tax system should be fair but also competitive in terms of compliance costs and ease of administration. The current position whereby large multinationals can carry out business without paying tax is tangibly unfair. The course of action taken to date has been one of cautious engagement and a determination to see the multilateral solution through to completion.

I think we are now getting close to the crossroads whereby a decision will be made to carry on with this multilateral solution, or because of frustration at the current rate of progress, to strongly consider an interim digital services tax.

About Professor Craig Elliffe FCA

Professor Craig Elliffe FCA specialises in the fields of international tax, corporate tax and tax avoidance.

He is the author of International and Cross-Border Taxation in New Zealand (Thomson Reuters), which was awarded the JF Northey Memorial Book Award in 2015, and Dividend Imputation: Practice and Procedure (Lexis). He has also written numerous articles and other materials on tax.

Professor Elliffe is currently Deputy Chair of Tax Advisory Group and is listed in Chambers and the International Tax Review as a leading tax practitioner.

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