sign uplog in
Want to go ad-free? Find out how, here.

David Parker 'broadly supportive' of Janet Yellen's push for a global minimum corporate tax rate; Grant Robertson to virtually meet with Yellen next week

David Parker 'broadly supportive' of Janet Yellen's push for a global minimum corporate tax rate; Grant Robertson to virtually meet with Yellen next week
Janet Yellen. Image from US Treasury website.

Revenue Minister David Parker is “broadly supportive” of US Treasury Secretary Janet Yellen’s call for a global minimum corporate tax rate.

Yellen, in a speech delivered earlier this week, said she was working with G20 countries to agree on a rate. 

The former Federal Reserve chair is effectively trying to ensure the US is an attractive place to do business, despite a push for businesses to pay more tax to help support the COVID-19 recovery.

While the New Zealand Government hasn’t formally considered Yellen's suggestion, Parker said: “We do recognise unfairness in the global tax system where multinationals can transfer their profits to low-tax jurisdictions. So, we’re broadly supportive of what she is saying.”

Parker’s comments precede a virtual meeting Finance Minister Grant Robertson is due to have with Yellen late next week.

Robertson said he hadn’t formed a view on Yellen’s suggestion. 

But he noted it was “interesting” her push came as the Biden administration planned to raise the US corporate tax rate to 28%, following it being cut from 35% to 21% under the Trump administration. He noted the change would bring the US’s corporate tax rate in line with New Zealand’s.

Yellen, in her speech, said: “Competitiveness is about more than how US-headquartered companies fare against other companies in global merger and acquisition bids.

“It is about making sure that governments have stable tax systems that raise sufficient revenue to invest in essential public goods and respond to crises, and that all citizens fairly share the burden of financing government.”

The Biden administration is proposing to spend US$2 trillion on infrastructure on top of its US$1.9 trillion stimulus package.

The European Commission earlier this week responded favourably to Yellen’s call, saying a minimum rate should be decided through the Organisation for Economic Cooperation and Development (OECD).

The OECD has long been working on a two-pillar global tax scheme. The first pillar is aimed at ensuring tech companies pay tax in countries they derive profits from, even if they don't have a physical presence there.

The second pillar is to establish a global minimum tax rate to prevent governments competing with each other by offering lower taxes to attract large multinational firms.

A European Commission spokesperson this week reportedly said: “We welcome the strong support from all G20 Finance Ministers for an agreement on both OECD pillars by July 2021.”

New Zealand is a member of the OECD, but not the G20.

Ireland’s finance minister, Paschal Donohoe, casted doubt on whether agreement could be reached on a global minimum rate.

He reportedly said he had “reservations” about having a global minimum rate, and questioned the impact this would have on economies (like Ireland) that use a lower corporate tax rate to attract business “as a part of their overall competitive model”.

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

25 Comments

Has this changed under a Labour government?
Apple pays zero tax in NZ despite sales of $4.2 billion

Reminds me of the WEF Davos forum where each year hundreds of billionaires arrive on their individual private jets to discuss the climate crisis.

Booking Holdings is another Audaxes. Absolute parasites and 'legal' tax evaders. Getting their comeuppance right now globally with the travel slump.

I'd be very surprised if NZ could do this unilaterally, so nothing to do with Labour

Just in case you haven't seen this, the US have decided all your internet tax belongs to them.

https://www.google.com/amp/s/mobile.reuters.com/article/amp/idUSKBN2BI31K

Curious that the US is against a US company being taxed by a country when that company provides a service in that country, which it charges for.

I’m sure, really sure Janet is pleased David is supportive. She said, I believe, David who.

And David didn't fully understand the proposal. He just saw something that involved higher taxes and blindly supported it.

the last time the americans asked us for something was when LJ came down here to get troops for Vietnam...

interesting times

Oh heck, don’t remind me. The tall rangy laconic Texan president alongside the the dumpy pompous voluble NZ prime minister. To be fair though Holyoake wasn’t willing but saw the USA & SEATO as an undeniable buttress for NZ security. Hence at least NZ forces were volunteers and didn’t include conscripts as in Australia.

its just very strange....america phoning us...i know we won the americas cup but seriously...whats up

maybe our housing situation is a major problem to the USA....they lent us the money for our houses...

but don't want our(US) banks going broke and into Chinese hands

on another note does anyone have any ideas which non profit organisation the SIS flagged for involvement with a foreign government?...

"Ireland's "headline" corporation tax rate is 12.5%, however, foreign multinationals pay an aggregate § Effective tax rate (ETR) of 2.2–4.5% on global profits "shifted" to Ireland, via Ireland's global network of bilateral tax treaties."
https://en.wikipedia.org/wiki/Corporation_tax_in_the_Republic_of_Ireland...'s%20%22headline%22%20corporation%20tax%20rate,network%20of%20bilateral%20tax%20treaties.

"However Ireland’s finance minister, Paschal Donohoe, has casted doubt on whether agreement can reached on a global minimum rate."

Now theres a surprise...

I suggest that Ireland is swimming against the tide here. These huge corporate profits have really flagged the loopholes in existing tax agreements which have essentially assumed some sort of honourable behaviour by corporates. But they have proven themselves untrustworthy, and therefore moved the goal posts such that Governments have to rewrite their laws to account for it. Inevitable really, they did it to themselves.

Oh undoubtably ...but just as Ireland has its own reasons for its position others (as alluded to by Parker) will be looking at the US motivation for this sudden solidarity with foreign governments revenue streams and act accordingly.

Call me a cynic

Yellen trying to find some $$ to pay for her massive stimulus package?

Of course. This has been coming for a long time. Govts are broke and only the rich, and sneaky companies, have any money left, so the tax authorities will be hounding them to orbit.

https://www.rt.com/shows/keiser-report/520149-complex-bets-increase-rate/ Max tells you what he thinks about Jellen around minute 5.45

Funny. (And btw it's Yellen, but Jellen works for German speakers).

Interesting situation the US Govt is in. On the one hand, they need to trap people in their rapidly debasing currency to keep the game going, but on the other there are a bunch of politicians that are bitcoiners. Mark Moss surveyed some names on 2/4/21 here:
https://www.youtube.com/watch?v=zjbIN3ShNZk&t=1258s

Could be a big internal fight coming.

And another thing Mark is surfacing is that the IMF is trying to get backing to mega-print SDRs (to throw at poor countries to keep them afloat), perhaps leading to replacing the USD as the world's reserve currency. Trouble is, the SDRs are backed by a basket of fiat currencies (ie. nothing):
https://www.youtube.com/watch?v=lFmv_z040HI

All the more reason to opt out of their bullshit system before it's too late.

I just thought it was a J.Lo type thing (for Jennifer Lopez, of course)
J for Janet + the ellen bit of the surname = Jellen!

OLD Snake Face Herself..

Saw this news a couple of days ago.

FED prints/buys TRILLIONS and the American government THINKS to itself.. "we need more tax [income in reality] to remain a creditable borrower, HELL, what happens if our BIG companies leave~!? ..

BEST we make ALL major western countries just as unappealing"

That's OLD Snake Face for ya~!!

An opportunity to increase tax, Labour are in like Robbos (intentional!) dogs.

She is talking 28%, and as stated we already charge 28% company tax = no change... Robbos dogs are at heel asleep under the desk champ.

I'm not against a minimum tax rate, however when you have government such as our current one, then we should get a minimum of competence, which is not the case.