More BEPS Measures By New Zealand On Transfer Pricing Audit (2)

; posted on
December 12th, 2017

The recently introduced BEPS Tax Bill has been submitted to the Parliament for its first reading. Alongside the Tax Bill, the country has also launched other measures to deal with taxation of multinationals, including transfer pricing audit on specific group of companies.

Transfer Pricing Audit on 16 Multinationals

The Revenue Inland Department (IRD) launched a regulatory impact state this July, announcing that the tax authority had been “aware of about 16 cases of transfer pricing and permanent establishment avoidance currently under audit that collectively involve about $100 million per year of disputed tax.” According to IRD, the transfer pricing measure is to be applied to multinationals with a global annual revenue of over 750 million euros, but the exact number of such companies within New Zealand is still very vague. Despite the IRD not listing the audited companies, recently Microsoft New Zealand and Oracle New Zealand are required to provide their latest account on their use of transfer pricing for the purpose of audit. According to Microsoft, the audit on the company extends to June 2016, compared with the original timeline from June 2013 to June 2015.

Anticipated Outcome of the Measures

The transfer pricing measure is expected to contribute another $50 million to the financial revenue. As regards measures in the Tax Bill, the interest deduction limitation rule is expected to bring an extra revenue amount of between $80 million to $90 million annually, and the hybrid mismatch rule is anticipated to generate additional tax $50 million on a yearly basis.

Source: NBR

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