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Inland Revenue

Tax Policy


International Tax - A Discussion Document

New Zealand’s current high rate of economic growth is the result of an extensive structural reform of the economy, including major reforms in the area of taxation.

Critical to sustaining this growth is continued investment by business and increased participation in the world economy. Openness to foreign capital, ideas and goods and services is essential.

One of the fundamental principles driving the Government’s economic policies is a commitment to a broad base, low rate tax environment. Such a tax environment is conducive to sound business decision making and encourages investment on merit. Such an environment is also good for the New Zealand economy.

The international tax has a history of being a contentious area of tax policy. This is due to the inherently complex nature of international tax and the role international tax plays as a back-stop to New Zealand’s domestic tax regime. The complexity of reforms to international tax since 1988 and the lack of a comprehensive discussion of the underlying rationale for the policy, have hindered the development of a broader agreement on tax policy details.

This document performs two roles:

  • it presents a discussion of an economic framework which covers the whole field of international tax, allows evaluation of other regimes and demonstrates how the various elements of international tax rules interact. This discussion is intended to provide a basis for ongoing refinement of New Zealand’s existing international tax rules; and
  • it outlines specific reforms to the tax rules (covering foreign direct investment, transfer pricing and thin capitalisation) which the Government proposes to consider implementing this year. These reforms, together with existing rules, constitute the building blocks for a more coherent international tax regime consistent with the framework presented.

The Government welcomes comments on both parts of the document.


Signature of Rt Hon Bill Birch, Minister of Finance

Rt Hon Bill Birch
Minister of Finance

Signature of Hon Wyatt Creech, Minister of Revenue

Hon Wyatt Creech
Minister of Revenue