Revenue from Visa and Mastercard transactions in NZ and Australia - flows out of these countries and others in the Pacific and through Singapore - resulting in NO local tax collected in the countries where the revenue is generated. It's worth noting that Visa and Mastercard are American financial behemoths.
Singapore is the winner, which is why it is the third-largest financial services hub.
What would be the tax on those numbers @ 28%.
Group revenue and tax.....
The NZ Commerce Commission says there's room for reducing the percentage paid by businesses, and this should filter down to the consumer. Currently, 2% could drop by 0.7%. Of course, our businesses and consumers welcome any drop in fees. Watch this space. The CC consultation paper submissions deadline is September 2.
I refuse to use payware, where businesses charge a fee of as much as 4%. Businesses can charge whatever they want—it's not regulated. Instead, I use EFTPOS, which is where you use the terminal. The only annoyance is that you have to enter your password, which is not as safe as contactless payments.
EFTPOS is also declining, so new innovative payment systems are required to give businesses and consumers more choice. This is where cryptocurrencies play a role and why it's taking a lot of time to get them widely accepted—i.e., they threaten the fat revenues of the likes of Visa and Mastercard.
As the article says NZ pays more in fees than other countries! We're quick to jump on Landlords and ramp up rates etc - but lack the appetite or maybe knowhow to protect our businesses and people from exploitation.
The NZ Government needs to work harder to protect businesses from paying too much in fees, by these institutions which are passed on to the consumer.
Regards,
Donna
Singapore is the winner, which is why it is the third-largest financial services hub.
They (Visa and Mastercard) process $95 billion of card payments in New Zealand annually and NZ businesses spend about $1 billion a year to accept their card payments.
Group revenue and tax.....
At 17%, Singapore's standard corporate income tax rate is already significantly lower than NZ's 28%. However, Mastercard and Visa's Singapore operations pay much lower effective tax rates than that.
Combined, Mastercard and Visa's Singapore arms recorded annual pre-tax profit of more than US$6.8 billion in 2023, with Mastercard's share of that US$3.7 billion, and Visa's US$3.1 billion. Mastercard paid income tax of US$40.325 million, which Interest.co.nz's calculations suggest is an effective 2023 tax rate of a mere 1.1%. Visa booked an income tax credit of US$49.470 million.
Combined, Mastercard and Visa's Singapore arms recorded annual pre-tax profit of more than US$6.8 billion in 2023, with Mastercard's share of that US$3.7 billion, and Visa's US$3.1 billion. Mastercard paid income tax of US$40.325 million, which Interest.co.nz's calculations suggest is an effective 2023 tax rate of a mere 1.1%. Visa booked an income tax credit of US$49.470 million.
The NZ Commerce Commission says there's room for reducing the percentage paid by businesses, and this should filter down to the consumer. Currently, 2% could drop by 0.7%. Of course, our businesses and consumers welcome any drop in fees. Watch this space. The CC consultation paper submissions deadline is September 2.
I refuse to use payware, where businesses charge a fee of as much as 4%. Businesses can charge whatever they want—it's not regulated. Instead, I use EFTPOS, which is where you use the terminal. The only annoyance is that you have to enter your password, which is not as safe as contactless payments.
EFTPOS is also declining, so new innovative payment systems are required to give businesses and consumers more choice. This is where cryptocurrencies play a role and why it's taking a lot of time to get them widely accepted—i.e., they threaten the fat revenues of the likes of Visa and Mastercard.
As the article says NZ pays more in fees than other countries! We're quick to jump on Landlords and ramp up rates etc - but lack the appetite or maybe knowhow to protect our businesses and people from exploitation.
The NZ Government needs to work harder to protect businesses from paying too much in fees, by these institutions which are passed on to the consumer.
Regards,
Donna