New Zealand proposals for the taxation of foreign investment: a view from across the Tasman

Abstract

Treasury and the IRD’s negative response to the Tax Review 2001 proposals to substantially reduce the tax rate on foreign investment is supported by research into the effectiveness of tax concessions to attract headquarters operations of multinational companies. It is not clear that tax is a decisive consideration in international investment considerations and any tax concessions may simply result in a transfer of tax revenue to foreign treasuries. In any event, broad tax concessions for foreign investment would not necessarily attract the most desirable type of investment. Such concessions might “unlevel” the playing field between competing foreign-owned and domestically owned businesses.