With the growing New Zealand economy, there has been a corresponding growth in the number of multinational companies trading in New Zealand.

Some multinationals pay a bare minimum amount of tax anywhere in the world by using international BEPS tax planning techniques.

The Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018 made a series of changes to New Zealand’s international tax rules as a response to the OECD/G20 Base Erosion and Profit Shifting (BEPS) project. Inland Revenue has updated its compliance focus on multinationals as well as published a comprehensive practical guide early this month including a wide range of measures to protect the New Zealand tax base from aggressive tax practices by multinationals.

Inland Revenue’s goal is to ensure that these large multinationals pay their fair share of tax in New Zealand. IRD focuses mainly on foreign-owned corporates with a turnover of more than $30 million. The new measures require such corporates to submit their financial statements and tax reconciliation annually. The new measures are said to be working well and are bringing in an extra $200 million in tax collected each year. 

Furthermore, New Zealand has joined with over 100 other jurisdictions in the OECD/G20 Inclusive Framework, increasing exchanges of information between tax authorities. The new anti-BEPS measures are said to be causing the behavioural changes amongst multinationals restricting their affairs.

Overall, the key message IRD wants to deliver is that “Offshore is no longer ‘off limits’ as far as tax compliance is concerned”.