On 28 March 2024, the government of New Zealand government announced that it passed the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Bill after receiving royal assent on 28 March 2024. The Bill provides key measures for the introduction of the Pillar 2 income inclusion rule (IIR) and the undertaxed payment/profit rule (UTPR) to ensure a minimum corporate tax of 15% for large multinational (MNE) groups with annual consolidated revenue of at least EUR 750 million in at least two of the preceding four fiscal years. The income inclusion rule (IIR) and under-taxed profits rule (UTPR) will go into effect from 1 January 2025, while the domestic income inclusion rule will be applied from 1 January 2026.

Multinational entities will be required to pay a multinational top-up tax to the Inland Revenue, which will be based on:

  • The income inclusion rule comes into effect when a New Zealand-based multinational corporation generates under-taxed income abroad;
  • The domestic income inclusion rule is applicable when a New Zealand-based multinational corporation generates under-taxed income within the country;
  • The under-taxed profits rule ensures that multinational corporations based in countries not compliant with GloBE rules still pay the top-up tax.

Other provisions of the legislation are as follows:

  • The introduction of a gaming duty under the Gaming Duties Act 1971 or offshore gambling duty, set at 12%. This duty applies to GST-registered individuals outside New Zealand who provide remote gambling services to residents in New Zealand.
  • Implement a transitional measure allowing electronic marketplace operators not to apply GST platform economy regulations to contracts for short-stay or visitor accommodations made before 1 April 2024. The GST platform economy regulations also go into effect from 1 April 2024.
  • Adjust the trustee tax rate with the top personal tax rate of 39% and introduce a NZD 10,000 de minimis rule. The rule specifies that trusts with trustee income up to this threshold, after deducting expenses, are subject to the 33% tax rate.