Taxation (Neutralising Base Erosion and Profit Shifting) Bill

Hon Stuart Nash

Taxation (Neutralising Base Erosion and Profit Shifting) Bill

Government Bill

3—1

Contents

Explanatory note
1Title
2Commencement
3Income Tax Act 2007
4Section BH 1 amended (Double tax agreements)
5New section CH 10B inserted (Interest apportionment: public project debt)
CH 10BInterest apportionment: public project debt
6New heading and section CH 12 inserted
CH 12Income from hybrid mismatch arrangement
7New heading and section CX 64 inserted
CX 64Income from financial instrument
8New heading and section DB 57B inserted
DB 57BMatching of deductions and income from multi-jurisdictional arrangements
9Section DR 3 amended (Life reinsurance outside New Zealand)
10Section EX 20D amended (Adjustment of cost fraction for excessively debt funded CFC)
11Section EX 20E amended (Relative debt-asset ratio for CFC)
12Section EX 44 amended (Five calculation methods)
13Section EX 46 amended (Limits on choice of calculation methods)
14New section EX 47B inserted (Method required for shares subject to certain returning share transfers)
EX 47BMethod required for shares subject to certain returning share transfers
15Section EX 52 amended (Fair dividend rate annual method)
16Section EX 53 amended (Fair dividend rate periodic method)
17New section FE 4B inserted (Meaning of public project asset, public project debt, and public project participant debt)
FE 4BMeaning of public project asset, public project debt, and public project participant debt
18Section FE 5 amended (Thresholds for application of interest apportionment rules)
19Section FE 6 amended (Apportionment of interest by excess debt entity)
20New section FE 7B inserted (Interest on public project debt for certain excess debt entities)
FE 7BInterest on public project debt for certain excess debt entities
21Section FE 8 amended (Measurement dates)
22Section FE 10 amended (Currency)
23Section FE 11 replaced (Temporary increases or decreases in value)
FE 11Disregarded increases or decreases in value
24Section FE 12 amended (Calculation of debt percentages)
25Section FE 14 amended (Consolidation of debts and assets)
26Section FE 15 amended (Total group debt)
27Section FE 16 amended (Total group assets)
28New section FE 16B inserted (Total group non-debt liabilities)
FE 16BTotal group non-debt liabilities
29Section FE 18 amended (Measurement of debts and assets of worldwide group)
30New subpart FH inserted (Hybrid and branch mismatches of deductions and income from multi-jurisdictional arrangements)
FH 1Subpart implements OECD recommendations for domestic law
FH 2Order of application of provisions
FH 3Payments under financial instruments producing deduction without income
FH 4Receipts under financial instruments producing deduction without income
FH 5Payments by New Zealand resident or New Zealand branch producing deduction without income
FH 6Receipts from non-resident or foreign branch producing deduction without income
FH 7Payments to person outside New Zealand producing deduction without income
FH 8Expenditure or loss through hybrid entity or foreign branch producing double deduction without double income
FH 9Expenditure or loss of hybrid entity, or non-resident through branch, producing double deduction without double income
FH 10Expenditure or loss of dual resident company producing double deduction without double income
FH 11Residents, or non-residents with branches, having expenditure funding overseas hybrid mismatches
FH 12Offset of mismatch amounts against surplus assessable income
FH 13Election by borrower under financial arrangement
FH 14Irrevocable election by owner of hybrid entity
FH 15Definitions
31New heading and section FZ 8 inserted
FZ 8Transition period for amendments to interest apportionment rules
32Section GB 2 amended (Arrangements involving transfer pricing)
33New section GB 51B inserted (Increases or decreases in value)
GB 51BIncreases or decreases in value
34New heading and section GB 54 inserted
GB 54Arrangements involving establishments
35Section GC 6 amended (Purpose of rules and nature of arrangements)
36Section GC 13 amended (Calculation of arm’s length amounts)
37New heading and sections GC 15 to GC 18 inserted
GC 15Aspects of loan adjusted for application of sections
GC 16Credit rating of borrower: other than insuring or lending person
GC 17Credit rating of borrower: insuring or lending person
GC 18Loan features disregarded by rules for transfer pricing arrangements
38New section HD 30 inserted (Members of wholly-owned large multinational group)
HD 30Members of wholly-owned large multinational group
39Section IA 2 amended (Tax losses)
40Section LE 1 amended (Tax credits for imputation credits)
41Section RF 2C amended (Meaning of non-resident financial arrangement income)
42New section RF 11C inserted (Interest paid by non-resident companies to non-residents)
RF 11CInterest paid by non-resident companies to non-residents
43Section YA 1 amended (Definitions)
44Section YD 4 amended (Classes of income treated as having New Zealand source)
45New section YD 4B inserted (Meaning of permanent establishment)
YD 4BMeaning of permanent establishment
46Section YD 5 amended (Apportionment of income derived partly in New Zealand)
47New section YD 5B inserted (Attribution of income derived through permanent establishment in New Zealand)
YD 5BAttribution of income derived through permanent establishment in New Zealand
48New schedule 23 inserted (Meaning of permanent establishment)
49Tax Administration Act 1994
50Section 17 amended (Information to be furnished on request of Commissioner)
51New section 21BA inserted (Information required to be provided by large multinational group)
21BAInformation required to be provided by large multinational group
52New section 78G inserted (Country-by-country report from large multinational group)
78GCountry-by-country report from large multinational group
53New section 139AB inserted (Penalty for member of large multinational group failing to provide information)
139ABPenalty for member of large multinational group failing to provide information
54Section 143 amended (Absolute liability offences)
55Section 143A amended (Knowledge offences)

The Parliament of New Zealand enacts as follows: