New Zealand: Implementing AEOI regime, exchange of transfer pricing rulings

AEOI in New Zealand

The Inland Revenue released a discussion document on implementing the automatic exchange of information (AEOI) regime. Once implemented, New Zealand financial institutions would need to report foreign account holders to countries that have also signed up for AEOI (i.e., 97 countries to date). Inland Revenue also confirmed that it will automatically and retrospectively exchange tax rulings—including details of all private taxpayer rulings and unilateral transfer pricing rulings, in effect as of 2014. The exchange will be with countries that have signed tax agreements with New Zealand (currently, over 50 tax treaties and tax information exchange agreements). Both changes were recommended as part of the OECD’s base erosion and profit shifting (BEPS) work.

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AEOI

The AEOI regime is modelled on the U.S. Foreign Account Tax Compliance Act (FATCA) regime. The AEOI requirements will apply to New Zealand financial institutions from 1 July 2017, with the first reporting due in mid-2018.

Exchange of tax rulings

Inland Revenue also confirmed that it will automatically and retrospectively exchange tax rulings. Inland Revenue will share details of all private taxpayer rulings and unilateral transfer pricing rulings, in effect as of 2014. The exchange will be with countries that have signed tax agreements with New Zealand. Currently, there are over 50 tax treaties and tax information exchange agreements in the New Zealand treaty network. 

KPMG observation

This Inland Revenue treatment will mean foreign tax authorities will now have access to businesses’ commercial information provided in support of rulings. Could this have an adverse effect on the demand for rulings going forward? Some observers believe that it would.

 

Read a February 2016 report [PDF 596 KB] prepared by the KPMG member firm in New Zealand: Automatic exchange: account information and tax rulings

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