New country-by-country reporting requirements for New Zealand headquartered groups

By Bart de Gouw

In October, the OECD published 13 papers and an explanatory statement outlining consensus actions under the base erosion and profit shifting (BEPS) project.  Included is a final report on action 13 in relation to transfer pricing documentation and country-by-country (CbC) reporting to tax authorities. The CbC report will provide tax authorities with global information for the purposes of risk assessment.

The New Zealand Inland Revenue is currently considering if a law change is required or if the current law is sufficient to implement these new requirements.  Inland Revenue has recently released a statement advising that the new requirements will apply to corporate groups headquartered in New Zealand with annual consolidated group revenue of EUR750 million (approximately NZ$1.2 billion) and above.

Initial analysis suggests around 20 New Zealand-headquartered corporate groups will be affected. The first groups impacted are those with 31 December balance dates. Data will be collected for this group for the 12 months beginning 1 January 2016. For 31 March balance date and 30 June balance date groups, data will need to be collected for the 12 months beginning 1 April 2016 and 1 July 2016 respectively.

Although the first CbC data reporting won't take place until the 2017 calendar year, the following aggregate information will need to be collected in 2016 and subsequent years for each jurisdiction where impacted groups operate:

• Gross revenues (broken down into related party and unrelated party categories)
• Profit (loss) before income tax
• Income tax paid (on cash basis)
• Income tax accrued (current year)
• Stated capital
• Accumulated earnings
• Number of employees
• Tangible assets other than cash and cash equivalents.

Affected groups will also need to list all their entities resident in each jurisdiction, noting the main business activity of each entity.

Inland Revenue has advised that it will contact each impacted corporate group individually to ensure they're prepared for these new reporting requirements.  For more information please contact one of our transfer pricing specialists.

Tax Alert December 2015 Contents

• The danger of washing up FBT in the final quarter
• Amending assessments – Commissioner’s revised statement
• Bill introduces GST on online services and a new residential land withholding tax
• Revenue Alert issued on certain employee share purchase agreements
• New country-by-country reporting requirements for New Zealand headquartered groups
• CRS - The next FATCA
• Ruling on FBT and car parks finalised