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NZ Planning International Tax Changes For Next Year

by Mary Swire,, Hong Kong

27 November 2014

New Zealand Revenue Minister Todd McClay has released two reports on proposals for future tax changes affecting multinational companies.

The reports provide an update on policy work being undertaken in New Zealand to pre-empt the outcome of the Organisation for Economic Co-operation and Development's (OECD's) base erosion and profit shifting (BEPS) Action Plan.

"Tax policy changes in New Zealand are generally only undertaken following public consultation, so the report describes some key public consultation scheduled for 2015, which will address the issue of base erosion and profit shifting," McClay said.

The first seven of the OECD's deliverables from its 15-point Action Plan were announced earlier this year, with the remainder to be finalized late next year. Anticipating the finalization of that Action Plan, the report recommends conducting public consultation in late 2015 on tackling the effects of hybrid mismatch arrangements and limiting base erosion through interest deductions.

"BEPS behavior by large companies usually exploits differences in tax laws in different countries," McClay said. "Hybrid arrangements for instance, which can be used to achieve double deductions or deductions without corresponding income, are of concern for New Zealand."

"But we're not leaving it all up to the OECD. We recognize that some aspects of our domestic tax laws not addressed by the OECD can be beefed up. The report therefore also recommends consultation in mid-2015 aimed at strengthening New Zealand's non-resident withholding tax rules and introducing administrative measures to improve the quality and usefulness of tax information. No country is immune from the effects of BEPS. Our tax laws are solid, but there is always room for improvement. These reports give me confidence that we're making good progress on the issue," McClay concluded.

TAGS: compliance | tax | tax compliance | interest | law | multinationals | withholding tax | New Zealand | Tax | Tax Evasion

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