New Zealand’s Inland Revenue invites feedback on proposed changes to thin capitalisation rules to encourage foreign investment in private infrastructure projects. Submissions are open until 19 June 2025.
New Zealand’s Inland Revenue has released a discussion paper inviting public consultation on the country’s thin capitalisation rules as they apply to infrastructure on 19 May 2025.
The purpose of this consultation is to gain a better understanding of how the current thin capitalisation settings might be discouraging foreign investors from investing in privately owned infrastructure projects in New Zealand, and to explore some possible solutions to address it.
New Zealand implemented the thin capitalisation rules in 1996. The rules have undergone a few modifications to ensure that they continue to be fit for purpose.
Inland Revenue is concerned that the general rules may make it harder for foreign investors to commit to infrastructure projects that are not part of such partnerships. To better understand the issue, it is seeking feedback from the public and industry stakeholders.
This issues paper outlines two potential options aimed at addressing the issue of how the current thin capitalisation settings may unduly deter FDI in privately owned infrastructure projects:
- a targeted rule that applies only to infrastructure projects, and
- a more general rule that applies to third-party debt.
The Inland Revenue currently favours a targeted rule approach as it directly addresses the issue, though feedback on both options are encouraged.
Submissions are open until 19 June 2025.
