Company tax rate issues – further information: Discussion Paper for Session 8 of the Tax Working Group

This paper expands on the Secretariat’s paper provided to support the Group’s previous discussion on the company tax rate. The paper briefly outlines the theory of company taxation in a small open economy. It sets out the Australian Treasury’s modelling of company tax reductions, which was noted in the previous paper, in some detail. It also provides results of the Secretariat’s preliminary modelling of company tax rate reductions for New Zealand, and reports similar results to the Australian Treasury’s results. As requested by the Group, the paper recaps the company tax changes and forecasts that were made in Budget 2007 and Budget 2010, and provides some material on the nature of foreign investment in New Zealand. Finally, an appendix provides material on what previous tax reviews said about the company tax rate.