New Zealand: Proposal, implementing BEPS Action 2 hybrid mismatch recommendations

New Zealand: BEPS Action 2 hybrid mismatch

A New Zealand government discussion document—"Addressing hybrid mismatch arrangements"—outlines the case for implementing the OECD’s base erosion and profit shifting (BEPS) Action 2 recommendations and raises matters of technical detail to “New Zealand-ise” them.

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The New Zealand discussion document suggests a comprehensive application of the OECD hybrid rules that would deny deductions or remove tax exemptions relating to hybrids so as to prevent “double non-taxation." The proposals, however, go further than a simple implementation of the BEPS Action 2 recommendations—they have potentially broader application.

KPMG observation

Tax professionals believe the proposed hybrid rules could have the potential to protect other countries at the cost of investment in New Zealand. There is the potential for the proposals to apply in unexpected ways. Despite the reach of the proposals, and important questions of policy and principle, there is a very short timeframe for submissions that are due by 17 October 2016. If current timelines apply, the proposals could be included in February-March 2017 tax legislation, with enactment a year later and a potential effective date of 1 April 2018.


Read a September 2016 report [PDF 579 KB] prepared by the KPMG member firm in New Zealand

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