May 8, 2010 - The New Zealand Inland Revenue Department (IRD) has begun a review of financing transactions made by a tobacco firm.
[BTA = BAT, Inland Revenue Department or simply Inland Revenue (Maori: Te Tari Taake, lit.The Department of Tax) is the New Zealand government department responsible for the collection of taxes..]
On May 6th British American Tobacco (New Zealand) Ltd (BAT) revealed that it is currently under investigation by the IRD for a set of financing transactions. Although both parties refused to disclose complete details on the investigation, industry analysts believe that the alleged discretion is similar to the tax evasion through structured financing charges laid against several New Zealand banks recently.
The BTA has announced that NZD 39.6 million has been set aside as a reserve for any back taxes that might need to be paid. The BTA commented further that the IRD has not yet filed an official complaint or issued all appropriate documents. When all official procedures and investigations are completed by the IRD, BTA will make a full comment on its position. An official statement issued by the BTA claims that recent court rulings against structured financing indicate that the New Zealand Government is taking a conservative jurisprudence approach and the BTA will have similar results to previous cases.
BAT (New Zealand), whose brands include Dunhill, Rothmans and Benson & Hedges, has provisioned almost $40 million in back taxes because of the IRD review of "a financing transaction undertaken by the company", according to its report for the year to December 31, filed with the Companies Office.
Reference: Tobacco Firm Under IRD Investigation, New Zealand Taxation, 5/6/2010.