A tax bill which will counter base erosion and profit shifting (BEPS) by multinational companies has been introduced into Parliament on 6th December 2017. The bill would implement the government’s policies concerning BEPS matters. The proposals bill will normally apply to financial years beginning on or after 1 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.
