On 6 December 2017, a tax bill to counter tax avoidance has been introduced into New Zealand’s Parliament by multinational companies and Minister of Revenue also published its commentary on the bill. Most provisions would enter into effect July 2018.
The proposed measures in this Bill will prevent multinationals from using:
- artificially high interest rates on loans from related parties to shift profits out of New Zealand (interest limitation rules);
- artificial arrangements to avoid having a taxable presence (a permanent establishment) in New Zealand;
- transfer pricing payments to shift profits into their offshore group members in a manner that does not reflect the actual economic activities undertaken in New Zealand and offshore; and
- hybrid and branch mismatches that exploit differences between countries’ tax rules to achieve an advantageous tax position.
The Bill also proposes amendments to strengthen the transfer pricing rules so they align with the OECD’s transfer pricing guidelines and Australia’s transfer pricing rules.
