New Zealand Closing Tax Loopholes

August 4, 2017 Taxation in New Zealand

Taxes in New ZealandWELLINGTON – The options for multinationals trying to dodge taxes in New Zealand are numbered, as the local government proposes new measures to tackle tax dodging.

On August 4th the government of New Zealand confirmed its plans to tackle tax avoidance of multinational businesses by introducing several new anti-avoidance measures.

The government hopes to see an extra NZD 200 million in extra taxes drawn from large multinational companies.

It is expected that the focus of any changes would be targeted at tech firms, which have recently been in the international spotlight for their tax behaviours.

The proposed changes revolve around stopping international parent companies charging exorbitant interest rates to their New Zealand subsidiaries; elimination of artificial arrangements which allow companies to avoid having a taxable presence in New Zealand; and stopping the exploitation of hybrid-mismatch arrangements.

It is expected that the changes will be finalized by the end of this year, and will come into effect by July 2018.

Explaining the move, the Finance Minister of New Zealand Steven Joyce “It is very important that every company operating in New Zealand pays their fair share of tax,” Mr Joyce says. While most multi-national companies follow the rules there are some that attempt to minimise or eliminate their New Zealand tax obligations. The proposals target these multinationals.