On 1 November 2019, the Inland Revenue has published a document setting out its compliance focus in respect of Multinational Enterprises (MNEs). The document aimed to make tax compliance more transparent for businesses and provide transparency and certainty.
The document also has an update on New Zealand’s progress against the OECD’s base erosion and profit shifting (BEPS) Action Plan which reflects New Zealand’s participation as a good global citizen, whilst tailoring our initiatives to the New Zealand context. The main focusing areas are as follows:
- simplifying transfer pricing measures;
- key focus on BEPS disclosure that is required to be made with tax returns from 2019;
- monitoring the implementation of anti-BEPS measures;
- new permanent establishment (PE) definition in double tax treaties by signing and ratifying the MLI;
- adoption of new rules to anti-hybrid and branch mismatches, following closely the BEPS Action 2 recommendations of the OECD;
- introduction of new rules requiring related-party loans between a non-resident lender and a New Zealand-resident borrower to be priced using a restricted transfer pricing approach.
Since 2016, New Zealand has successfully implemented BEPS minimum standards such as country-by-country reporting and exchange of tax rulings. They also introduced a range of new anti-BEPS measures that ensure New Zealand responds appropriately to domestic and international threats to its tax base.
