The KPMG 2009 Corporate and Indirect Tax Rate Survey, which investigates the corporate and indirect tax rates of the OECD for the 2009 year, has found that New Zealand holds the seventh highest corporate tax and one of the lowest indirect tax rates of the nations surveyed.

Ireland and Iceland had the lowest corporate tax rates in the survey, with 12.5% and 15% respectively. While New Zealand’s rate of 30% was rated 7th, with USA and Japan reigning the top spots at rates of 40% and 40.69% respectively.

The survey found that New Zealand holds the sixth lowest indirect tax rate in the world, with its 12.5% GST rate. Canada meanwhile has the lowest rate at 5%, and Denmark was the highest at 25%.

According to the survey, global governments are increasingly more reliant on indirect taxes for income procurement. Paul Dunne, KPMG Senior Tax Partner, commenting on the global levels of indirect taxes said “However, rate increases increase prices for consumers. For this reason GST rate increases quickly become political and therefore if considered in New Zealand should be thought of as part of a broad package of measures.”

The Asia-Pacific Economic Co-operation (APEC) is most likely going to be based around the current economic situation of the world and the possible responses of all countries involved in the meeting. If the recently finished G20 summit is any indication, the economic situation will be the primary talking point.

The meeting is attended by 20 world leaders, and over 3600 delegates. Figures show that the trade between APEC countries accounts for almost half of that in the world and nearly 60 percent of the world’s Gross Domestic Product.

John Key is scheduled to meet the Queen of England, and the British Prime minister after the APEC meeting.

The current APEC countries are Australia, Brunei, Canada, Chile, China, Indonesia, Japan, Hong Kong, South Korea, Malaysia, Mexico, Papua New Guinea, Peru, the Philippines, Russia, Singapore, Taiwan, Thailand, the United States and Vietnam. India, Mongolia, Pakistan, Laos, Bangladesh, Colombia and Ecuador are also seeking membership.

Following Black Tuesday, the New Zealand Stock Exchange (NZX) has progressively closed on a down note. The last trading day of the week, Friday the 10th of October, saw a fall of 4.724%. This trend is continued to an even greater extent in markets throughout the world. By trading close on the Friday, the Japanese market closed 7.7 % down, with drops as low as 11%, and the Australian market saw a drop of over 8%. Trading on the NZX on the Friday was characterized by the NZSX-50, which was faced with the fact that there were only 9 rises throughout the day, and 94 falls.

Locally, solutions have been proposed from many parties. Of these the idea of drastic decreases in the official cash rate, and the paper bought forward jointly by the New Zealand Institute and NZX, are receiving the most attention.

While analysts expected an upcoming interest rate fall of over 50 points, claims have come in that 100 points would be the necessary amount. Some analysts do denounce such thought, claiming that there was not enough hint of crisis in New Zealand to justify changes before the next official Reserve Bank announcement, in two weeks. Further, New Zealand was not faced with a situation which would be remedied by such drastic short-term actions, and instead would benefit from a sound long-term plan.

The other popular suggestions are those bought forward by New Zealand Institute chief executive David Skilling and NZX chief executive Mark Weldon, in their paper “Economy on the Edge: Swan Dive or Belly Flop?”. These include abolishing tax advantages for house investment, lowered temporary tax rates for returning New Zealand ex-pats, allowing provisional tax rate payments in arrears and gathering and selling partial stakes in Government owned businesses.

Double Taxation agreements prevent the situation of taxation on one income by two countries, through coming to an agreement as to what incomes will be taxed in the country of residence and exempt in the country of occurrence. It also deals with the opposite case where the income will be taxed at the country of occurrence and compensation arises in the country of residence.
Double Taxation also extends to more comprehensive sharing of tax information between tax authorities.

New Zealand currently holds double taxation agreements with the following countries:

Australia
Austria
Belgium
Canada
Chile
China
Czech Republic
Denmark
Fiji
Finland-
France
Germany
India
Indonesia
Ireland
Italy
Japan
Malaysia
Mexico
Norway
Poland
Republic of Korea
Russian Federation
Singapore
South Africa
Spain
Sweden
Switzerland
Taiwan
Thailand
The Netherlands
The Philippines
United Arab Emirates
United Kingdom
United States of America