The Finance Ministry in New Zealand has revealed its final decision on motions to tackle profit-shifting by multinationals. The relative procedures will be incorporated in a bill that will be introduced by the end of the year in order to become part of the legislation by July 2018.
Notably, the referred polices relate to hybrid mismatch arrangements, transfer pricing, interest limitation rules and permanent establishment avoidance.
The Finance Minister and the Revenue Minister released a statement conveying the aims of the new bill. According to the statement, the new decision will aim to prevent foreign parent companies charging high interest rates to their subsidiaries in New Zealand in order to minimize their taxable profits in New Zealand. Moreover, the new initiative intends to suspend multinationals from employing counterfeit arrangements in order to avert having a taxable New Zealand presence. Lastly, the new decision wants to ensure that multinationals are taxed accordingly to the economic substance of their business activity in New Zealand.