New Zealand Branch Report, Subject 1: Assessing BEPS: Origins, Standards and Responses

Abstract

Assessing BEPS The government has reviewed New Zealand’s current policy settings and determined that most are robust and fit for purpose. Having identified hybrid mismatch arrangements, interest allocation and transfer pricing as issues that may need addressing, it is developing and refining its proposed response. It is also monitoring BEPS-related reforms in other jurisdictions, particularly Australia. The government is consulting with the public including business groups on proposed reforms to New Zealand domestic law and on changes resulting from New Zealand’s adoption of revised international rules and guidance. The private sector is actively engaged with the government on the New Zealand response. It is early days yet, in the sense that domestic legislative reform relating to, for example, interest allocation and hybrid arrangements is still to be confirmed. Business is concerned at the risk of complexity and over-reach and, more broadly, the effect such reforms may have on inbound investment and taxpayers’ cost of capital. It is also concerned that New Zealand will get ahead of, or out of alignment with, its major trading partners in the adoption of anti-BEPS measures. From the private sector’s perspective the effectiveness of the generic tax policy process is likely to be tested in 2017 as BEPS related legislative reform is introduced and enacted.