Venturing Beyond the OECD: An Analysis of New Zealand's Response to Multinational Corporate Tax Avoidance

36 Pages Posted: 17 Apr 2018 Last revised: 13 Jul 2018

See all articles by James Keate

James Keate

Victoria University of Wellington, Faculty of Law, Student/Alumni

Date Written: April 4, 2018

Abstract

Multinational tax avoidance is a major economic issue that has generated significant political traction in recent years. Multinational corporations have been eroding the tax bases of states by shifting profits around the globe. The OECD has recently finalised a co-ordinated response to this so called “base erosion profit shifting”. The OECD has created “action plans” that states can adopt by renegotiating existing tax treaties. New Zealand has chosen to venture beyond the OECD’s action plans and create domestic legislation to target multinational tax avoidance. This paper examines whether New Zealand’s proposed legislation will be consistent with its tax treaties. It is argued there will be some inconsistencies, which may engage New Zealand’s state responsibility in international law and cause double taxation. I also analyse the legal and policy implications of New Zealand’s proposals, and draw on comparative perspectives. I ultimately conclude that New Zealand’s proposals may reduce commercial certainty and foreign investment. However, I suggest both New Zealand’s proposals and the OECD’s initiatives are a novel step towards harmonising the international tax regime. The effects of which will likely be felt for years to come.

Keywords: Tax; base erosion and profit shifting; multinational enterprises; international law; OECD; multilateral instrument; double tax agreements

JEL Classification: K00

Suggested Citation

Keate, James, Venturing Beyond the OECD: An Analysis of New Zealand's Response to Multinational Corporate Tax Avoidance (April 4, 2018). Victoria University of Wellington Legal Research Paper, Student/Alumni Paper No. 28/2018. Available at SSRN: https://ssrn.com/abstract=3156092 or http://dx.doi.org/10.2139/ssrn.3156092

James Keate (Contact Author)

Victoria University of Wellington, Faculty of Law, Student/Alumni ( email )

PO Box 600
Wellington, Victoria 6140
New Zealand

Register to save articles to
your library

Register

Paper statistics

Downloads
40
Abstract Views
212
PlumX Metrics