Labour wants to give businesses more flexibility and control over when they pay their tax.
Party leader Andrew Little has put up a proposal that would give businesses the option of choosing to pay their tax through a system similar to PAYE rather than in three big instalments.
It's similar to a plan outlined by NZ First leader Winston Peters on Wednesday, and they could both be trying to upstage the Government which is working on comprehensive changes to the tax regime.
Mr Little announced his proposal in a speech this morning.
He says under the current system businesses are forced to guess their annual income and pay tax in three large instalments throughout the year.
"If they guess wrong, they can be faced with a big bill at the end of the year which can push a small business to the wall," he said.
"Provisional tax makes many business owners feel like the deck is stacked against them. Provisional tax lacks flexibility; it's frustrating, sucks up time and effort that could go into growing businesses and creating jobs."
Labour's proposal would mean businesses would have the option of choosing to pay their tax through regular instalments at a rate they can adjust, through a system similar to PAYE.
"This means businesses can align their payments to suit their circumstances," Mr Little said.
But Labour isn't going so far as to call their proposal a policy.
Mr Little said Labour would be sending out the discussion document to businesses to get their feedback before taking it into the 2017 election.
On Wednesday Mr Peters called for an end to provisional tax and mooted a simple two-monthly rolling calculation tied with GST cycles, so businesses could pay tax as they go.
The Government is working with IRD on changes to the tax system.