The New Zealand government will propose several new measures to combat tax avoidance by multinational firms, Finance Minister Steven Joyce and Revenue Minister Judith Collins announced August 3.
The proposals will include interest deduction limits for borrowing between related entities, tougher permanent establishment provisions, rules that ensure that multinationals are taxed in accordance with the economic substance of their activities in New Zealand, hybrid mismatch rules, and laws that make it easier for the New Zealand’s tax authority to investigate uncooperative multinational companies.
The new tax measures will be added to a tax bill that will be introduced by the end of 2107. Enactment is expected by July 2018.
Joyce said the changes will bring in about NZD 200 million (USD 146 million) in tax revenue annually.
“The new measures will significantly strengthen our tax rules and our ability to ensure that multinationals are taxed fairly and on the basis of their actual level of economic activity in New Zealand,” Joyce said.
(Editors note: this article was corrected 8/18/2017 to fix an error in the exchange rate from New Zealand Dollars to United States Dollars.)