The New Zealand government on February 14 announced that it will recommend a change to transfer pricing provisions in a bill designed to curtail tax avoidance by multinationals.
The language, in the Taxation (Neutralising Base Erosion and Profit Shifting) Bill (the BEPS Bill), concerns provisions that limit the rate of deductible interest on related party cross-border debt.
These restricted transfer pricing rules contain drafting errors that cause it to not apply as widely as intended, the government said.
Officials will recommend that the rules be amended so that they will also apply to a New Zealand person borrowing from a non-resident person or group if the lender and borrower would be associated if their voting interests were determined based on their highest shareholder decision-making right rather than their average shareholder decision-making rights.
New Zealand’s Finance and Expenditure Committee will hear testimony on the bill on February 28 and March 2.
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