Air New Zealand recently won a Cook Island High Court tax case against Cook Islands Collector of Inland Revenue and secured $3.51 million as tax refund payment.
The high court ruled in favour of the case of Air New Zealand Limited vs the Collector of Inland Revenue and said Air New Zealand taxes should be paid in New Zealand instead of the Cook Islands.
The Cook Islands government subsidised Air New Zealand $64.95 million over ten years to operate direct Rarotonga and Sydney Kingsford Smith and Rarotonga and Los Angeles International flights. However, these services ceased with the onset of pandemic, but the Collector of Inland Revenue continued to tax Air New Zealand on the subsidised flights. Going ahead, the court ordered not only the refund of taxes but also the payment of legal fees and costs.
Speaking to the Cook Island News, Prime Minister, Mark Brown clarified: “We refunded the tax; it's a tax refund.”
In a written statement to One News, Richard Thomson, Chief Financial Officer, Air New Zealand said: “The airline was incorrectly taxed on certain payments received from the Cook Islands Government. This decision reinforces the international tax rules around the taxation of international airlines.”
As of now, Air New Zealand offers a single daily roundtrip flight between Auckland International and Rarotonga.