New Zealand Planning More BEPS Measures
New Zealand’s tax agency has set out the international tax initiatives it intends to pursue, in particular in response to the OECD’s base erosion and profit shifting plan.
It said it will undertake further work on a package of BEPS initiatives, which will include hybrid mismatch rules to prevent companies structuring their business entities or financing arrangements to take advantage of differences in how countries’ tax these arrangements, and interest limitation rules to prevent companies stripping excessive profits out of New Zealand by way of deductible interest payments.
It will undertake work to ensure New Zealand is ready to sign the OECD’s multilateral instrument, which will amend the nation’s bilateral tax treaties to insert a new anti-treaty abuse article, a new permanent establishment definition, anti-hybrid entity rules, and dispute resolution articles.
Further, it will apply the revised OECD Transfer Pricing Guidelines to address misallocation of profits to low tax jurisdictions. Legislation could be introduced to facilitate this, if needed, the tax agency said.
Last, the tax agency said it will consider whether other measures to help address BEPS concerns may be appropriate for New Zealand, such as a UK-style diverted profits tax or increased public transparency concerning the tax affairs of multinationals.