Businesses in New Zealand and Australia want tax changes to get closer to a single economic market, says BusinessNZ.
A joint report released today by the Productivity Commissions of New Zealand and Australia: Strengthening Trans-Tasman Economic Relations recommends many steps to help align the business environments of the two countries.
BusinessNZ Chief Executive Phil O’Reilly says the report contains useful recommendations in areas such as investment, intellectual property, occupational licensing, visas, biosecurity, quarantine, student loans and others.
“These can help build on the Closer Economic Relations process towards our two countries truly becoming single economic market.
“However it is disappointing that the Productivity Commissions have stopped short of recommending action on the issue of double taxation, perhaps the biggest unresolved issue for business in both countries.”
Companies based in Australia or New Zealand with operations in the other country currently have their profits taxed twice, since neither country recognises the other’s system for offsetting tax credits.
Mr O’Reilly says this double taxation is an unnecessary financial burden on trans-Tasman business, and a system for mutual recognition of tax credits is needed.
The Productivity Commissions’ report recommends generally removing investment restrictions to facilitate movement of capital, but stops short of recommending mutual recognition of tax credits, leaving it to the two Governments to decide.
Mr O’Reilly said it was time for the politicians in both countries to show leadership on the issue.
“We know the New Zealand Prime Minister is supportive of removing double taxation, and business would urge his engagement with his Australian counterpart to achieve this policy change.
“We are on the eve of the 30th anniversary of CER - achieving this change in 2013 would be a fitting move towards a true single economic market.”