The Taxation (Neutralising Base Erosion and Profit Shifting) Bill, now before select committee, promotes a package of measures to combat BEPS arrangements, including wide-ranging changes to New Zealand’s cross-border investment rules.
Chapman Tripp tax lawyers, Jai Nario (Senior Associate) and Kian Looi (Solicitor), co-authored an article for Tax Notes International on concerns that the Bill raises in its current form.
The article highlights:
- the complexity of some provisions in the Bill, for example the proposed introduction of comprehensive anti-hybrid rules that are arguably unnecessary in the New Zealand context
- areas where the government seems to go beyond the OECD recommendations, and
- the practical impact of the proposals in combination, particularly the interaction between the more robust transfer pricing rules, changes to address the perceived avoidance of permanent establishments and the proposed approach to limit interest deductibility.
Although we expect that improvements will be made to the technical wording of the Bill, we think it is unlikely that wholesale changes will be made at the policy level.
The bulk of the Bill will come into effect on 1 July 2018, meaning that businesses (particularly large multinationals) have limited time to undertake restructures that may be necessary to comply with the new regime.
Please contact us if you would like to further discuss the impact of any aspect of Bill, or if you would like assistance in determining your tax obligations going forward under the new post-BEPS environment.