Banks fighting their two million dollar tax bill

The major banks in New Zealand are taking their fight against Inland Revenue over $2 billion of unpaid tax to the Supreme Court. The Herald on Sunday of 25 November says the main banks have been accused of a “tax rort so massive the sums involved will have an impact on the average taxpayer.”

Court judgements so far have been in favour of the Commissioner of Inland Revenue, who insists that the banks pay the public $1.7 billion plus interest. The BNZ, ANZ, National Bank, Westpac, ASB, and Rabobank are all involved. The Herald on Sunday understands that Deutsche Bank has already settled out of court.

The case concerns a loophole that IRD claims the banks have been exploiting despite being closed off by legislation in 2005. The loophole, according to the Herald on Sunday allowed the banks to send money through an offshore company, and through their Australian parent company before being repaid in New Zealand.

kelvin_pycroft.jpg Finsec Acting President Kelvin Pycroft is calling on the banks to meet their tax obligations in New Zealand.

“The big Australian banks operating in this country all benefit from the results of New Zealand taxes. The roads their staff and customers travel on, the healthcare system that treats their staff, and the school and tertiary education system that gives their staff the skills necessary to run these banks and many other essential services were all paid for through the tax system.”

“The banks also need to contribute the local economy and society through paying some of their profits into the public purse,” said Pycroft. “With the company tax rate being dropped to 30 percent, it is even more vital that the banks meet their full tax obligations.”

“Customers pay their tax and expect their banks to do the same,” said Kelvin Pycroft.

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