Tag: New Zealand

New Zealand introduces Group Rating Approach for certain Cross-Border relatet party Borrowing and Debt Arrangements

New Zealand introduces Group Rating Approach for certain Cross-Border relatet party Borrowing and Debt Arrangements

The OECD’s final report on interest limitation rules notes that thin capitalisation rules are vulnerable to loans with excessive interest rates and many transfer pricing practicioneres finds that transfer pricing may not the most effective way to prevent profit-shifting using high-priced related party debt. Related-party transactions are fundamentally different to third-party transactions. Factors that increase the riskiness of a loan between unrelated-parties (such as whether the debt can be converted into shares or the total indebtedness of the borrower) are less relevant in a related-party context. In New Zealand new rules on pricing of cross-border borrowing and debt has been implemented according to which interest deductions can be restricted. Questions asked under the new rules: Draft guidance on these rules was issued by the New Zealands Inland Revenue in August 2018. New Zealand 2018-sr-beps-interest-limitation ... Continue to full case