New Zealand considering changes to nonresident withholding tax rules, BEPS measures

 

New Zealand is considering changes to its tax laws that would tighten nonresident withholding tax rules for interest, improve the quality and usefulness of tax information provided by large corporations, address the taxation of foreign trusts, and implement OECD base erosion and profit shifting (BEPS) output, according to government reports released by Minister of Revenue, Todd McClay.

The reports, released November 26, recommend that New Zealand launch a consultation in mid-2015 aimed at strengthening New Zealand’s nonresident withholding tax (NRWT) rules for interest. “We have identified deficiencies in New Zealand’s rules that can lead to the indefinite deferral of NRWT or the avoidance of NRWT entirely,” the government states .

New Zealand is considering reforming its domestic rules to line up with the OECD’s base erosion profit shifting (BEPS) work on hybrid mismatches and interest deductions for related-party debt, the reports state. It will launch a consultation on potential tax reform in these areas following the release of final OECD’s work under actions 2 and 4 of the BEPS plan, expected at the end of 2015.

The reports also recommend requiring large corporations to file tax returns earlier so tax authorities can identify and address problems sooner, and suggest adopting standardized electronic disclosures to allow data to be analyzed more quickly. The reports also recommend the introduction a voluntary code of practice for large corporations which would require good tax governance, a transparent relationship with Inland Revenue, and avoidance of aggressive tax planning. A consultation on these measures will be released by mid-2015.

The government also said it would issue a report analyzing the rules for taxing foreign trusts before the end of 2014.

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