New Zealand’s government is working to support multinational enterprises comply with tax laws, focusing on preventing base erosion and profit shifting (BEPS). The tax authority -Inland Revenue, encourages companies to engage upfront, and actively offering guidance through advance pricing agreements and rulings. A September update emphasizes data analytics to identify risks and target compliance efforts. Key BEPS risks include mispricing intangibles, hybrid mismatches, thin capitalization, and profit stripping through restructuring. New Zealand’s unique approach demands localized transfer pricing and robust documentation, especially for intellectual property and financial arrangements. While Pillar Two global anti-base erosion rules begin in 2024, the country also plans to introduce a domestic income inclusion rule in 2026. Multinationals should also track pending legislation for a potential digital services tax.
To learn more on the Inland Revenues’ approach on the matter, click here.