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New Zealand looks to shut down cross-border tax loophole

Xinhua, September 6, 2016 Adjust font size:

The New Zealand government on Tuesday signaled its intention to adopt international rules to clamp down on the cross-border tax-avoiding practice of hybrid mismatch arrangements.

The strategy was used by some large multinationals to shift profits overseas and minimize their tax, and the government considered New Zealand's rules on hybrids could be stronger, Revenue Minister Michael Woodhouse said.

"A discussion document which proposes that New Zealand adopt the OECD (Organisation for Economic Co-operation and Development) recommendations on hybrid mismatch arrangements was today released for consultation," said Woodhouse.

"Hybrid mismatch arrangements are one of the base erosion and profit shifting strategies used by multinationals to exploit the difference between how two countries might treat a cross-border transaction, resulting in less tax."

The OECD recommendations removed the advantage of using hybrids.

"It is important that our rules complement those of other countries, particularly Australia and the UK who have both announced their intentions to adopt the OECD recommendations in this area," said Woodhouse.

The proposal is open to submissions until Oct. 17. Endit