New Zealand: Implications of BEPS for New Zealand businesses

Implications of BEPS for New Zealand businesses

The OECD’s first batch of recommendations to address international tax avoidance, under the base erosion and profit shifting (BEPS) plan, addresses seven of the 15 areas—including the taxation of the digital economy, tax mismatches arising from hybrid financial arrangements, and various modifications to the international transfer pricing rules (with recommendations on the other eight areas to follow in 2015).

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The BEPS proposals create both risks and opportunities for businesses in New Zealand and will impose additional, and significant, compliance costs on business operating cross-border, including New Zealand multinationals.

While the reports represent (largely) the consensus view of 44 countries, including New Zealand, the proposals are yet to be formally finalised and further evolution of the recommendations seems likely. There are, therefore, risks to early adoption by New Zealand of what are still technically draft measures, and without regard to how other countries may respond. This will remain a challenge for any government formed after this weekend’s election.

 

Read a September 2014 report [PDF 110 KB] prepared by the KPMG member firm in New Zealand: OECD releases first seven BEPS recommendations

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