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  3. New Zealand Committed To BEPS Action, Says Woodhouse

New Zealand Committed To BEPS Action, Says Woodhouse

by Mary Swire,, Hong Kong

17 November 2016

Countering base erosion and profit shifting (BEPS) strategies is not a new-found enthusiasm for the Government, Michael Woodhouse, New Zealand's Minister of Revenue has said, while noting that the Government still has work to do in this area.

Woodhouse was delivering the opening address at the Chartered Accountants Australia and New Zealand Annual Conference on November 17, 2016.

Woodhouse said that while the country's "transfer pricing rules are robust, there's no denying that the ground has shifted somewhat with practices having evolved since then. That is why it is important to take another look and see whether our rules can be made even stronger."

He said: "The OECD's new transfer pricing guidelines are now considered to be the benchmark and will prevent companies reducing their tax by using artificial transactions between associated parties which would not normally occur between third parties. Transfer prices and conditions that do not align with the actual substance of the multinational's economic activities will be modified by the rules."

Woodhouse said that the Government is considering measures that will make it harder for multinationals to avoid having a taxable presence in New Zealand if they are involved in significant economic activity there. The Government is also looking to release proposals next year to bolster New Zealand's thin capitalization rules, to ensure that foreign-owned firms cannot shift excessive profits out of New Zealand.

The Government will also take adequate measures in 2017 to neutralize the effects of hybrid mismatches and is closely monitoring the progress made by the UK and Australia in this area. It is also closely watching what Australia and the UK are doing in regards to Diverted Profits Tax. "Officials have provided some advice to the Government and we will look to say more on this in the near future," he said.

Last, Woodhouse said that New Zealand intends to sign the OECD's multilateral instrument to implement the tax treaty-related BEPS measures next year.

TAGS: compliance | tax | investment | business | tax compliance | tax avoidance | interest | law | Organisation for Economic Co-operation and Development (OECD) | Australia | United Kingdom | ministry of finance | agreements | multinationals | legislation | tax planning | transfer pricing | withholding tax | New Zealand | G20 | tax reform | trade | business investment | Tax | BEPS

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