New Zealand Law Society - NZ now part of multinational tax information sharing agreement

NZ now part of multinational tax information sharing agreement

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In signing the Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports, New Zealand has joined 38 other countries in implementing an important part of the base erosion and profit shifting (BEPS) Action Plan.

Along with Canada, China, Iceland, India and Israel, New Zealand officials signed the Agreement in Beijing on 12 May 2016.

The agreement allows all signatories to bilaterally and automatically exchange Country-by-Country Reports with each other, as contemplated by Action 13 of the BEPS Action Plan.

It will help ensure that tax administrations obtain a complete understanding of how multinational enterprises structure their operations, while also ensuring that the confidentiality of such information is safeguarded.

Revenue Minister Michael Woodhouse says the recent signing will help ensure large multinationals pay their fair share of tax by providing for increased sharing of information between revenue authorities.

"Some large multinationals often have intricate financial arrangements in place to minimise or eliminate tax obligations on their earnings, known as base erosion and profit shifting (BEPS)," Mr Woodhouse says.

"This new country-by-country reporting agreement goes to the very heart of such activity by allowing participating tax jurisdictions to share and receive information about these large multinationals.

"Under the agreement, large multinationals will have to provide information relating to economic activity, including the global allocation of income and taxes paid.

"Each revenue authority collecting this information will then be able to exchange that information with other treaty partners under the exchange of information arrangements.

"It will also provide a complete picture of each company's activities in all countries and so encourage compliance and make it easier to spot any tax wrongdoing," he says.