ANALYSIS: National and Labour are fighting over whether bringing back foreign buyers, as National is proposing, would undermine international agreements.
There are essentially two issues at play here - tax treaties and trade deals - and National's legal advice is not dead certain there won't be an issue.
On the first point, we have treaties with 40 countries about how we tax foreigners.
Labour's overseas investment spokesperson David Parker said our international tax treaties could likely exempt many key markets from National's policy.
"It's impossible to see where all the buyers who could be covered by their tax are coming from. Given they've exempted Australia and Singapore they've already eliminated 27 percent of the foreign buyers from 2018," he said.
"New Zealand has a range of tax treaties with places like the UK, Hong Kong, Japan and Canada, it's possible a significant number of other places could be excluded."
Tax treaties were an issue in New South Wales which recently had to scrap its own foreign buyers tax because of legal issues.
National told Newshub it thinks this is a problem that could be circumnavigated because the foreign buyers tax would also apply to the Government's Digital Services Tax so it is already solving a workaround.
The second issue is that the foreign buyers ban is baked into trade deals.
After Newshub reported earlier this month that National wasn't ruling out bringing foreign buyers back, Labour said the CPTPP trade deal meant all the countries in that agreement could be allowed to purchase land in New Zealand with exactly the same rights as Kiwis.
It appears National went and got legal advice from Tracey Epps Consulting about whether it would be an issue.
Newshub's obtained that advice and it rests on whether foreigners are subject to a tax or a fee.
"The proposed fee for purchase of residential property by overseas persons will also be discriminatory," the advice said.
But there are two exceptions that give New Zealand policy space to charge a fee that is not a tax on purchases of residential property by overseas persons.
The advice said if the 15 percent tax which National is proposing is considered a fee, all of our Free Trade Agreements contain a taxation exception.
For example, in the CPTPP, the legal advice said "this exception clearly gives New Zealand the policy space to impose a tax on the transfer of property".
The legal advice was also not certain on the reaction of other countries.
"New Zealand should not be criticised by its trading partners for the proposed fee, but the possibility cannot be completely ruled out.
"Given that country-specific exceptions are bespoke to each country, there is little guidance available as to how they ought to be interpreted."
But the legal advice concludes: "In my view, such arguments do not have legal merit and, in any case, the fact that we would actually be liberalising by allowing investment (albeit subject to a fee) that has been heavily restricted since 2018 would logically make any complaint less likely from a practical perspective."
The Beehive will be poring over our international agreements to try and prove National's plan is impossible.
Amelia Wade is a senior political reporter.