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New Zealand Tables Legislation To Tackle BEPS Issues

by Mary Swire, Tax-News.com, Hong Kong

07 December 2017


A tax bill to counter base erosion and profit shifting by multinational companies was introduced into Parliament on December 6.

The Taxation (Neutralising Base Erosion and Profit Shifting) Bill contains measures to prevent multinationals from using:

  • Artificially high interest rates on loans from related parties to shift profits out of New Zealand;
  • Hybrid mismatch arrangements that exploit differences between countries' tax rules to achieve an advantageous tax position;
  • Artificial arrangements to avoid having a taxable presence in New Zealand; and
  • Related-party transactions to shift profits into offshore group members in a manner that does not reflect the actual economic activities undertaken in New Zealand and offshore.

Revenue Minister Stuart Nash said: "I am very pleased to introduce legislation that will introduce fairness and equity back into the tax system. New Zealanders expect every company to pay its share of tax, no matter how big or powerful that company may be. The proposed new rules will be an effective response to current avoidance techniques, but are not the end of the story. The Government will continue to investigate further options, both legislative and administrative, to counter aggressive tax practices. Multinational companies are a welcome part of our economy but they must abide by the rules. They must pay their fair share of tax."

The legislation is expected to have its first reading in parliament on December 12.

TAGS: tax | value added tax (VAT) | interest | offshore | multinationals | legislation | transfer pricing | New Zealand | Tax

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