In a press release published on October 5th the Food Industry Group of New Zealand has struck out against Denmark’s new “fat tax”, saying that the measure is unlikely to have any positive effects on national obesity levels.

The Danish government has recently instated a new tax, which is levied in the fat content of certain foods. The measure was aimed at reducing the fat consumption of Danish citizens, with the intention of improving the national diet. However, Katherine Rich, Chair of the Food Industry Group (FIG), claims that the new tax will only serve to make food more expensive for families. She added that the subsequent price increase in foods, combined with a shift in eating habits, could even put the health of children and the elderly at risk.

The FIG does not support similar measures for New Zealand, as they will not prove to have the intended effect. Katherine Rich explained that fat taxes are often supported by claims that consumption of any type of fats is inherently unhealthy. She added that measures target at healthy eating should also consider all types of food eaten by people, and weighed against their personal activity levels.

According to FIG the Danish fat tax will serve well to increase tax revenues in Denmark, and that any similar moves in New Zealand would only have the same outcome.

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Two Australian winemakers, Premium Wine Brands and Treasury Wine Estates, are calling for a removal of the currently active Wine Equalization Tax (WET), which they claim is unjustly supporting economically unsustainable wine producers in Australia and New Zealand.

The WET system is a value based tax which is charged on all Australian and New Zealand wines that are sold in Australia. Under the current WET scheme, wine producers are able to claim rebates on all wines sold in Australia, up to a maximum of AUD 500,000. According to Premium Wine Brands and Treasury Wine Estates, the rebates are allowing unsustainable producers to continue operating, which is flooding the wine market and diluting profits.

Currently, Australian wine producers receive AUD 200 million back in tax rebates from the WET system, New Zealand producers are reported to see a rebate of AUD 30 million per year.

The Australian wine market is already seeing a bumper year for production, with higher than typical yields from grapes. Alongside the large number of functioning producers, the wine sector is experiencing lower than usual individual company profits. Recently calls have also been made to revamp the tax system, as the significant wine production levels are leading to excessively cheap alcohol in Australia.

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New Zealand’s implementation of international tax information exchange mechanisms were evaluated in an international peer review led by the Global Forum on Transparency and Exchange of Information for Tax Purposes, with a report on the findings being released on June 1st.

According to conclusions drawn in the report, the New Zealand government and the New Zealand tax authorities have satisfactorily implemented international standards for tax information exchange and transparency. The country’s legal framework was praised for not having bank secrecy rules, or legal information exchange restrictions based on dual criminality or domestic tax interest principles.

During the Global Forum’s on-site review, New Zealand’s tax authorities were judged as having adequate means and capabilities to obtain information regarding individuals’ and companies’ bank details, ownership, identities, and accounting information. The country’s legal framework also provides adequate means for other governments to request, receive, and utilize tax information and data from other jurisdictions. It was found that New Zealand tax authorities generally hold, or can quickly access, adequate amounts of data regarding locally registered business entities, without the involvement of field offices, meaning that international information requests can be processed quickly.

Despite the overall positive review, the report’s authors suggested a small number of improvements that could be made to New Zealand’s tax information exchange capabilities. It was suggested that the government should investigate means of ensuring that ownership and identity information is available on the owners of companies with nominee shareholders. In addition, the Global Forum deemed it important that rules be implemented to guarantee the accuracy of information provided to the Registrar of Companies when registering a new business entity, particularly one with non-resident directors. The New Zealand government is currently investigating legislative changes which could address the raised issues, and any changes will be assess by the Forum during New Zealand’s next peer review.

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On January 16th the Prime Minister of New Zealand John Key indicated that he will attempt to persuade British Foreign Minister William Hague to reconsider the UK’s upcoming airport departure tax. The Prime Minister believes that the tax could be especially harmful to New Zealand’s tourism industry, and even undercut the economic impact of the upcoming Rugby World Cup.

The British Foreign Minister is expected to arrive in New Zealand on January 20th, along with the Defense Secretary Liam Fox. The visit will last two days and is expected to consist of several ceremonial visits, along with numerous political discussions. John Key has stated that the issues of the departure tax and immigration between the UK and New Zealand will be the primary topics.

The rates for the Air Passenger Duty (APD) were raised by the UK Government in November 2010, with a potential for further increases int he short- and medium-term. The tax levies different rates on passengers, based on their travel distance and seat class. New Zealand is classified as a long-haul destination, and subsequently attracts the highest levy. Currently, the APD will be charged at GBP 85 (approx. NZD 176) per person flying in economy class, and GBP 110 (approx. NZD 227) for higher classes.

Commenting on the increase in November 2010 Tourism Industry Association Chief Executive Tim Cossar stated that the UK Government originally that the tax was intended as an environmental tax, although no movement has been made to use the revenues for eco-projects. Also in November the Foreign Affairs minister Murray McCully indicated that potential talks with the UK Minister could have some positive results, saying, “…it’s fair to say that Foreign Secretary William Hague in particular has made it clear that he understands the points that we have made – that this is a very punitive tax as far as more distant nations like New Zealand are concerned.”

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On December 30th the Australian Green Party outlined its agenda for 2011, which included a proposal to establish a system which would use the profits arising from mining taxes to fund free tertiary education for all Australians.

The Green Party believes that introducing a system of tertiary education would cost approximately AUD 2.5 billion. The funding would be sourced entirely from the upcoming Mineral Resource Rent Tax (MRRT), which could come into effect as early as July 2012. The claim has already been contested by Bruce Chapman, Economist at the Australian National University, saying that the system would cost as much as AUD 4 billion annually.

The leader of the Green Party Bob Brown commented on the tertiary education proposal, saying, “Unrestricted access to education is essential and is in line with the government’s own advice that future jobs require higher skills.”

Soon after the proposal was announced, the Shadow Education Minister Christopher Pyne labeled the idea as “middle class welfare gone mad.” He contested that a free tertiary education system would not change the composition of students in higher-education and would bring little, if any, extra benefits to the wider Australian society. Bruce Chapman added a similar opinion for the use of the mining tax, saying, “…it is a very regressive use of taxpayers’ money to have graduates contribute nothing … this means less public expenditure or higher taxes in other areas.”

The Green Party also outlined several other social measures which they thought are necessary for the country. It was suggested that extra funding could be assigned to housing, high-speed rail , primary-level education, and dental care, alongside the free tertiary education. It is estimated the entire funding package would cost approximately AUD 23 billion over the next four years.

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Foreign film productions have received nearly NZD 500 billion over the last decade in the form of tax breaks, rebates and subsidies while filming in New Zealand. According to recently surfaced figures, NZD 220 million has been made available to production companies through tax breaks, and at least another NZD 200 million has been granted as rebates for production expenditures.

The production tax breaks were granted through the Government’s Large Budget Screen Production Grant (LBSPG), which allows certain tax breaks for productions with local spending exceeding NZD 15 million. The grant comes in the form of a tax break to the value of 15 percent of the production expenditure. Further grants can be given for post, digital and visual effects production.

From figures previously made available by the New Zealand Government and the Inland Revenue Department, it is known that the production Avatar received NZD 44.69 million from the LBSPG program. However, the Government also estimated that the film attracted almost NZD 307 million in extra economic activity to New Zealand. The Lord of the Rings productions by themselves were reported to have received NZD 300 in tax breaks over the last ten years, although their economic benefits are regarded as greatly exceeding the costs. It is estimated that an approximate NZD 100 million will be claimed by the upcoming filming and production of the Hobbit films.

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On December 1st the New Zealand Finance Minister Bill English and the Revenue Minister Peter Dunne announced that a Double Taxation Agreement (DTA) has been signed with Hong Kong. The agreement was signed on behalf of Hong Kong by the Financial Secretary John Tsang, at a ceremony held in Auckland.

According to Peter Dunne, Hong Kong is New Zealand’s 9th largest trading partner, with exports to the area valued at approximately NZD 850 million per annum. He summarized the intentions behind the DTA, saying, “This agreement will make New Zealand a more attractive investment destination for Hong Kong investors, and will make it easier for New Zealand businesses to invest in Hong Kong.”

The Inland Revenue Department of Hong Kong issued a press release at the time of the signing, explaining the taxation benefits of the new agreement. For a Hong Kong company with a permanent establishment in New Zealand will receive credits in Hong Kong for any taxation paid in New Zealand. For Hong Kong residents who are receiving dividends from New Zealand from a non-permanent established business a 30 percent withholding tax will apply, compared to a rate of 30 percent without the agreement. In the case of qualifying beneficial owners, a rate as low as 0 percent may apply. Royalties withholding tax will be reduced from a rate of 15 percent to a maximum of 5 percent. Withholding tax on interest from New Zealand will be reduced by 5 percent, to a level of 10 percent. It is hoped that the reduced rates will attract greater levels on inter-country business between New Zealand and Hong Kong.

The DTA still needs to be ratified by both Governments, before it can be enacted or applicable to tax payers of either country.

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The High Commission in London has confirmed that the Governments of New Zealand and the Isle of Man have appropriately completed their legal ratification processes regarding the Tax Information Exchange Agreement (TIEA) and Double Taxation Agreement (DTA) signed by the countries. With the stipulated one year waiting period over, as outlined in the agreements, the DTA and TIEA came into force on July 27th.

Under the new TIEA, the Governments of both countries will be able to request taxation and bank information on taxpayers in cases of suspected tax evasion or investigations. The agreement is aimed at greatly reducing instances of tax evasion between the two countries, and counts towards the Organization of Economic Cooperation and Development’s (OECD) standards of international tax transparency.

The DTA eliminates the occurrence of double taxation on incomes earned in either country, by allocating taxation rights to Governments, on a pre-determined set of taxpayer incomes. The DTA also addresses transfer pricing adjustments on transactions carried out by cooperation operating between the nations.

The Isle of Man Government stated that the now-effective agreement shows the country’s dedication to upholding internationally agreed standards on taxation and cooperation, along with the principles of transparency and effective exchange of information in tax matters.

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Last week the IRD released a statement disclosing its intention to utilize New Zealand’s existing Tax Information Exchange Agreements (TIEA) to catch potential tax evaders. Martin Scott, Group Manager of Assurance, revealed that the IRD is particularly interested in discovering New Zealand tax residents undisclosed offshore bank accounts, overseas life-insurance policies and superannuation benefits.

Under current New Zealand tax legislation, taxpayers are required to disclose all of their incomes, including those from foreign sources. According to Martin Scott, governments worldwide are becoming increasingly cooperative with New Zealand authorities in sharing tax and bank account information for the purpose of audits and criminal investigations. New Zealand is currently engaged in 15 separate bi-lateral TIEA agreements. Martin Scott added that in the future he expects even greater levels of availability of information on financial transactions involving New Zealanders.

Taxpayers who hold undisclosed offshore assets have been advised consult with a professional tax advisers regarding their situation. New Zealanders who are knowingly evading their tax obligations through the use of offshore assets are advised to consider making a voluntary information disclosure to the IRD. Currently, failure to reveal appropriate financial information can attract severe punishment, including a 150 percent shortfall penalties and criminal prosecution. Martin Scott warned tax evaders to make appropriate use of any time left before their assets are discovered in an IRD investigation.

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On June 5th Cameron Brewer, CEO of the Newmarket Business Association, issued a statement supporting Ann Lockhart, CEO of the Queenstown Chamber of Commerce, who on the same day called for a revised GST-exemption program to be instituted for foreign visitors. Under the proposal, overseas nationals could present their purchase invoices at a New Zealand international airport and be granted an exemption on any GST paid on purchases throughout their visit.

The comments were sparked by a speech given by Bill English, Finance Minister of New Zealand, in which he refuted the possibility of a GST-exemption system being created in the near future. Bill English stated that he is not in favor of contributing complications to the country’s current “clean” GST system. He added further opinion, saying he does not believe that tourists would not cease visiting New Zealand simply because of a lack of GST refunds.

According to Ann Lockhart, the refunds would not be aimed at attracting new tourist to the country, but increasing the amount of spending that visiting tourist do, during their visits. Cameron Brewer’s statement claimed that even if only 5 percent of tourist utilized the scheme, an additional NZD 30 million extra spending would occur as a direct result. Cameron Brewer added a note of consolation, saying that despite Bill English’s words, John Key, Prime Minister of New Zealand and national Tourism Minister, is interested in perusing the matter further.

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