Revenue Minister Stuart Nash has introduced the Taxation (Neutralising Base Erosion and Profit Shifting) Bill to Parliament.
The bill amends the Income Tax Act 2007 and the Tax Administration Act 1994 and has the objective of introducing measures to counter the particular Base Erosion and Profit Shifting (BEPS) strategies observed in New Zealand.
The measures included in the bill are designed to stop 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.
The Department of Inland Revenue has released detailed commentary on the bill.