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New Zealand Unlikely To Adopt Diverted Profits Tax: Cabinet

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

14 December 2016


New Zealand's Cabinet has said a Diverted Profits Tax is not currently its "preferred option" for tackling base erosion and profit shifting (BEPS).

A newly released Cabinet paper says the Government intends to consult taxpayers in early 2017 on measures to strengthen transfer pricing and permanent establishment rules. It indicated that New Zealand may not proceed with a diverted profits tax (DPT), which is being adopted in the UK and Australia, but may adopt elements of the levy.

On the issue of a DPT, the Cabinet paper said: "While the current preference is not to adopt a DPT, we have not ruled it out. If following consultation on the discussion document (or at any other time in the future) we consider that our proposed package would not be effective in addressing transfer pricing and permanent establishment avoidance, we will revisit the adoption of a DPT."

"While [a DPT] is likely to achieve greater taxation of these profits, it could impact on perceptions of the predictability and fairness of New Zealand's tax system for foreign investment," the paper said.

TAGS: tax | investment | tax avoidance | Australia | transfer pricing | New Zealand | BEPS

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