International and Country Perspectives
Edited by Iris Claus, Norman Gemmell, Michelle Harding and David White
13. 13.1 Company taxation in New Zealand Matt Benge and David Holland* INTRODUCTION The purpose of this chapter is to examine the role of the company tax as a critical part of the New Zealand income tax system. It does not consider radical reforms such as ACE systems or cash-flow taxes. Rather, it examines tax design issues within the context of a company tax with conventional rates and structure. Nor does it make a detailed examination of the imputation system, which forms a key bridge between company and personal taxation. The general features of New Zealand’s company tax system were established in the reforms of 1989. Since that time, there has been an accumulation of specific policy changes and an evolution of New Zealand’s economic context and the broader company tax environment. This has led to pressures on the current regime. This chapter briefly outlines these pressures and considers a number of policy responses to them. Some of these pressures are external and arise from international considerations, in particular downward pressures on the company tax rate. Domestically, they arise principally from the gap between the company and personal tax rates, leading to tax-minimising behaviour by taxpayers – which is sometimes referred to as the ‘integrity issue’ – and how best to respond to it. The appropriate response to these pressures must take into account a number of key facts that form the New Zealand context: 1. Company taxation provides a higher level of government revenues than in most other OECD countries. In...
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