New Zealand's Inland Revenue Department (IRD) has published three consultation documents on measures to address international tax avoidance through base erosion and profit shifting (BEPS), reports Tax News.
The three documents cover BEPS – Transfer pricing and permanent establishment avoidance; BEPS – Strengthening our interest limitation rules; and New Zealand's implementation of the multilateral convention to implement tax treaty-related measures to prevent BEPS.
"Our broad-based low rate tax system continues to perform very well for New Zealand overall," said Finance Minister Steven Joyce. "However it's important that it keeps evolving to ensure that all companies operating in New Zealand pay their fair share of tax."
"The proposals in these documents are in line with the recommendations from the Organisation for Economic Co-operation and Development's (OECD's) base erosion and profit-shifting (BEPS) project, which has developed best-practice measures for the global response to BEPS."
The consultation documents contain proposals for tackling concerns about multinationals booking profits from their New Zealand sales offshore, even though these sales are driven by New Zealand-based staff; preventing multinationals from using interest payments to shift profits offshore; and implementing New Zealand's entrance into an international convention for aligning double tax agreements with OECD recommendations.