AEOI stakeholder meetings

AEOI stakeholder meetings

KPMG recap the AEOI stakeholder meetings in Auckland and Wellington and outline our observations.

1000

National Director - Tax

KPMG in New Zealand

Contact

Also on KPMG.com

Inland Revenue held stakeholder meetings in Auckland and Wellington on the implementation of AEOI (with a final session to come – see details below). Inland Revenue’s presentation can be downloaded here.

This follows the release of a discussion document in mid-February on AEOI implementation issues. Submissions on the document are due by 31 March. (You can read our initial views here.)

KPMG attended both sessions. A few observations:

  • AEOI will apply in New Zealand from 1 July 2017. This is now “hard wired”. It appears to have been driven by international pressure for New Zealand to align with the second wave of AEOI countries.
  • Inland Revenue has indicated that a phased implementation of AEOI is possible but has left open to submitters how this could be achieved. It seems possible that alignment with the phased introduction of Anti-Money Laundering (AML) rules could be considered.
  • Draft legislation will be introduced in July 2016, with expected enactment by the end of the year. This means there is significant pressures on consultation timelines.
  • While AEOI provides a framework for exchanging financial account information with all participating countries, it is expected that not every country will require reporting of their residents.
  • Inland Revenue can suspend exchange of information with countries where privacy and data secrecy may be at risk. Countries’ privacy and data security standards, and compliance with these, will be independently assessed. Inland Revenue will also bring to bear its experience with exchanging information with other tax authorities.

There are a number of detailed AEOI design issues on which Inland Revenue is keen to receive feedback. This includes:

  • The financial entities that should be carved out of AEOI as having a “low risk of tax evasion”. The clear message, however, is that this may be a difficult exemption to obtain.
  • The threshold, if any, for reviewing “dormant” accounts. The OECD has suggested a US$1,000 threshold. Should NZ adopt a higher (lower or no) threshold?
  • How the “wider approach” for AEOI due diligence should apply in New Zealand. That is, do NZ reporting financial institutions prefer to report all non-resident account holders to Inland Revenue or only the residents of countries that are participating in AEOI? (Under the latter approach, NZ financial institutions will effectively become the “gate keepers” for reporting purposes.) A subset of this question is whether financial institutions would prefer to hold this information themselves?
  • The reporting period for AEOI. Should this be aligned with FATCA, or vice versa? The FATCA reporting period in New Zealand is to 31 March, whereas most AEOI participating countries have a 31 December reporting period.

An important part of AEOI is convincing other countries that New Zealand has a valid regime. This raises enforcement and penalty questions.

New Zealand’s withholding tax regimes, which rely on tax residency here and elsewhere, could be used to support the view that New Zealand has a robust AEOI regime. This may allow a minimal approach to the application of penalties. It would also suggest a 31 March reporting period is suitable.

Inland Revenue could test AEOI compliance with withholding tax and Approved Issuer Levy (AIL) reporting. We would be interested in NZ financial institutions’ views on the viability of such an approach.

It is important financial institutions understand and work through these issues and make their views known to Inland Revenue by the submission due date.

Final stakeholder meeting – audio conference

For those that were unable to attend the Auckland and Wellington stakeholder meetings, Inland Revenue will be hosting a wrap-up audio conference. The conference details are as follows:

When Thursday 17 March 2016, 9am to 11am NZT
Phone +64 4 978 4062
Questions Email to global.aeoi@ird.govt.nz before and during the conference
+64 4 978 4062
+64 4 978 4062
+64 4 978 4062

© 2017 KPMG, a New Zealand partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

Connect with us

 

Request for proposal

 

Submit

KPMG’s new-look website

KPMG has launched a state of the art digital platform that enhances your experience and provides improved access to our content and our people, whatever device you are on.