Abstract:
This study provides an empirical analysis to see whether New Zealand companies listed on the NZX 50 between 2015 and 2017 are responsible corporate tax payers or whether they engage in corporate tax avoidance. Our results indicate, after removing companies from the property and retirement and aged care sectors in the analysis, that the remaining companies listed on the NZX 50 have effective tax rates that are close to and similar to the corporate statutory tax rate. For companies in the property and retirement and aged care sectors, we find that these firms have effective tax rates that are much lower than the corporate statutory tax rate, which might initially indicate the prevalence of tax avoidance. However, closer inspection of their financial statements indicates that they are not doing anything that is untoward and that the lower effective tax rates are due to differences in the accounting for investment properties, which are a major asset on these companies’ balance sheets, for financial reporting and taxation purposes. Overall, our study shows that the sample of NZX 50 companies are responsible corporate tax payers and that there is no evidence that they are engaged in tax avoidance.
