A tax bill which will counter multinational companies from shifting profits out of New Zealand to lower tax countries was introduced to Parliament on 6 December 2017.The Taxation (Neutralising Base Erosion and Profit Shifting) Bill contains measures which will go further to prevent those companies from using –
- artificially high interest rates on loans from related parties to shift profits out of New Zealand;
- hybrid mismatch arrangements that exploit differences between countries’ tax rules to achieve an advantageous tax position;
- artificial arrangements to avoid having a taxable presence in New Zealand; and
- related-party transactions to shift profits to offshore group members in a manner that does not reflect actual economic activities undertaken in New Zealand and offshore.