Anti-avoidance International tax & business Tax administration

New Zealand tax on inbound foreign direct investment: The good, the bad and the ugly

Source: The Tax Specialist Journal Article

Published Date: 1 Apr 2013


The New Zealand government recognises that the removal of tax-related impediments to inbound investment should be to the nation’s advantage. But, at the same time, the government is anxious to protect its tax base against tax planning on the part of multinational enterprises. This article discusses three recent developments in New Zealand tax law and administration which impact on foreign investment into that country. These developments are a reduction in the corporate tax rate and (through recent double tax agreements) in withholding tax rates, a broadening of the scope of the thin capitalisation regime, and a greater use of administrative action, particularly the general anti-avoidance rule, targeted at cross-border financing arrangements.

The article discusses, in particular, the much publicised decision of the Court of Appeal in Alesco New Zealand Ltd v CIR which is a recent illustration of the increasing use of the general anti-avoidance rule.

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Anti-avoidance International tax & business Tax administration 2013

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