CROSS BORDER ISSUES

The IRD have a dedicated and increasingly active team of senior staff dealing with cross-border issues including Transfer Pricing and Thin Capitalisation.  These issues affect you if you operate a branch of your business or subsidiary in a foreign county or if your business is a branch or subsidiary of an overseas parent company.

In order to ensure that New Zealand gets its "fair share" of tax revenue, the IRD are increasingly scrutinising transactions between related businesses in different countries.  By law, you are required to consider individual transactions and must be able to provide documentary evidence that they are conducted at arms-length and for full value.  Failure to do so can give rise to assessments on (extra) deemed income, or deductions being denied.  Each of these will increase your New Zealand taxation, but it is not guaranteed that a corresponding deduction will be allowed in the other country or countries involved.

In addition, when extending your business abroad or extending your offshore business into New Zealand, the correct structure and financing is essential.  If loans make up too much of the business' capital base, interest deductions may be denied, creating unnecessary tax liabilities.

We have the expertise and the connections through our membership of the International Network of Accountants and Auditors (INAA) to deal with all of these issues to advise you fully.

 

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