NEW ZEALAND Law and Practice Contributed by: Greg Neill, Fred Ward and Callum Burnett, Russell McVeagh
enterprise has undertaxed income in New Zealand) took effect on 1 January 2026. 9.2 Government Policy and Objectives Approach The New Zealand government has generally adopted a positive attitude to the implementation of BEPS and remains committed to ensuring that highly digitalised multinational enterprises that derive material amounts of income from New Zealand are liable for their “fair share” of New Zealand tax. New Zealand continues to support the implementa - tion of Pillar Two, but the implementation of Pillar One remains less certain. Inland Revenue has confirmed that New Zealand will exercise its discretion not to adopt the aspects of Pillar One formerly referred to as “Amount B” (being an optional simplified and streamlined transfer pricing approach). As a result, New Zealand’s existing transfer pricing rules and cur - rent practice will continue to apply notwithstanding the introduction of this approach in other jurisdictions. “Amount A” of Pillar One has yet to be finalised, and New Zealand continues to monitor progress. Although New Zealand introduced a Bill in August 2023 providing for a comprehensive Digital Services Tax (DST) as an alternative to Amount A, the Bill did not progress to legislation and was formally aban - doned in May 2025. This decision reflected the gov - ernment’s publicised view that New Zealand should prioritise an internationally co-ordinated solution, and that a unilateral DST was no longer required. The DST will therefore not be implemented in the absence of a future change in governmental policy. As noted in 9.1 Adoption of BEPS Recommenda- tions , New Zealand has implemented the Pillar Two initiatives. 9.3 International Tax International tax measures have a relatively high pub - lic profile in New Zealand, given the country’s geo - graphical location and dependence on international trade. New Zealand is, and has historically been, a net importer of capital and therefore depends on robust international tax rules in relation to inbound capital
investment in particular. The implementation of BEPS recommendations has generally been regarded as being consistent with that sentiment. 9.4 Competitive Tax Policy Objectives Like many other jurisdictions, New Zealand has a desire to ensure that its tax policy is competitive internationally. As noted in 9.3 International Tax , New Zealand has a high dependence on inbound capital so it is important that the relevant tax settings are competitive, in order to attract investment and max - imise growth. However, at the same time, there is a desire for the New Zealand tax system to be robust and a general view that New Zealand is likely to be better off if it focuses on where it has a competitive advantage rather than introducing specific incentives. In relation to BEPS, the New Zealand government has noted that, while New Zealand is starting from a good position relative to many other OECD countries, taking further steps to address BEPS is an important priority. 9.5 The Competitive Tax System No key features of the New Zealand tax system have been identified as being at risk or vulnerable as a result of BEPS pressures. 9.6 Hybrid Instruments and BEPS Implementation In 2018, New Zealand enacted a comprehensive set of rules regarding hybrid and branch mismatches. These rules incorporate the core aspects of the recommen - dations in the OECD reports regarding hybrid and branch mismatches of 2015 and 2017, with certain modifications for the New Zealand context. 9.7 Interest Deductibility and Territorial Tax Regime New Zealand does not have a territorial tax regime whereby tax is paid on New Zealand-sourced income only. As a general principle, New Zealand taxes its residents on their worldwide income. 9.8 Controlled Foreign Corporation Reform This is not applicable in New Zealand. 9.9 Anti-Avoidance Rules The implementation of BEPS measures in New Zea - land has also meant an increased focus on the use of
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