February 19 2018
In these briefs, we’re looking at moves to stop multinationals from avoiding paying tax, website privacy and why you need to make sure you’re compliant, another hefty fine issued under the new health and safety laws, and tightening the screws on anti-competitive behaviour.
New tax legislation for multinationals
At present, multinationals can avoid paying tax by shifting profits out of New Zealand. A new tax law is expected to be introduced in July this year. In its proposed form, The Taxation (Neutralising Base Erosion and Profit Shifting) Bill will affect multinationals operating in New Zealand and overseas.
These proposed measures will see New Zealand’s tax laws regarding cross-border transactions become more aligned with those in Australia. They are also generally consistent with OECD recommendations.
The specific areas the new law aims to address are:
- Multinationals using artificially high interest rates on loans from related parties to claim tax deductible expenses.
- Multinationals with arrangements that exploit the differences between two or more countries’ tax rules to pay less tax.
- Multinationals with artificial arrangements to avoid having a permanent establishment, which in turn avoids having a taxable presence in New Zealand.
- Multinationals making transactions with offshore group members that don’t reflect their actual economic activities in New Zealand and offshore.
Having a strong web presence is now essential for running a business, engaging customers and collecting useful data. Just like traditional media, if you’re collecting personal information, you have obligations under the Privacy Act 1993. The legislation contains 12 Privacy Principles which regulate how you collect, use, disclose and store personal information.
The Privacy Commissioner’s website has a free online tool called ‘Priv-o-matic’ which can generate a simple privacy statement. If you do collect personal information and are unsure if your policy is adequate, speak to one of our business lawyers immediately.
A second hefty fine under the new health and safety laws
You’ll be aware from our previous articles on the subject, that the new health and safety laws come with more severe, wider reaching penalties for non-compliance. This is designed to hold employers responsible for the safety of their staff in the workplace.
Following the case against Budget Plastics in August last year, which demonstrated how the courts would apply the Act, we’ve seen a second judgment and penalty for non-compliance.
October 2017 saw a decision about a Rangiora Carpets Limited employee who suffered serious injuries after falling through a false ceiling. The court noted the hazard was obvious and ‘easily and cheaply remedied.’ Rangiora Carpets received a reduced fine for its previous good record and guilty plea. However, the final amounts payable were a fine of $157,500, reparation of $20,000 and $1,228 for costs.
We now have two strong examples that show the courts are prepared to imposed hefty fines where they are satisfied the Health and Safety at Work Act has been breached. You should take this as a strong caution if you haven’t reviewed your health and safety practices.
We’d also note that the Health and Safety at Work (Hazardous Substances) Regulations came into effect on 1 December 2017. The regulations contain rules around managing substances that affect human health and safety in the workplace. Visit the Worksafe website for more information on the new regulations.
Commerce Act 1986 amendments tighten up on anti-competitive behaviour
Recent law changes have been made to promote competitive behaviour and to provide clarity around competition law. In particular, the Act prohibits anti-competitive behaviour such as price fixing. The changes broaden the definitions concerning prohibited cartel activities including output restrictions and market allocation. It brings New Zealand’s competition law into alignment with Australia and other jurisdictions.
The changes also provide new exemptions to arrangements that were typically seen as a cartel activities, recognising the extended definition of cartel behaviour now captures otherwise legitimate business relationships between suppliers and distributors who are also competitors. Two such exemptions are certain collaborative activities and vertical supply contracts, provided specific criteria are met.
A clearance mechanism has been introduced allowing parties contemplating collaborative conduct to obtain prior approval from the Commerce Commission. We strongly advise you to contact our business lawyers if you have any questions or concerns about how these changes might affect your arrangements.