Worldwide transfer pricing reference guide 2014

New Zealand (continued)
Frequency of tax audit and transfer pricing scrutiny by the tax authority (continued)
The risk of the transfer pricing methodology being challenged is dependent on the complexity of the cross-border associated party
transaction. Transactions involving provision of intangibles, financing and intra-group services tend to receive higher scrutiny during a
transfer pricing risk review.
APA opportunity
Section 91E of the TAA allows a unilateral APA to be issued in the form of a binding ruling. Bilateral or multilateral APAs may be entered
into pursuant to New Zealand’s double tax agreements under the mutual agreement procedure provisions. The IRD has not established
any formal guidelines for APAs, as each case is considered to be different, depending on a taxpayer’s specific facts and circumstances.
The IRD encourages pre-application conferences to make the APA application process less time-consuming.
Expected reaction to OECD Report on BEPS
The IRD has not, to date, provided any comments on the OECD White Paper on Transfer Pricing Documentation although IRD is likely
to support the OECD initiatives for a Masterfile provided that overall documentation provides an adequate evaluation of New Zealand
specific functions, assets and risks.
IRD and The Treasury released a tax policy report (Taxation of multinationals August 2013) strongly supporting the approach suggested
by OECD in its action plan and the focus and priority given to actions recommended in that plan. New Zealand officials are participating in
the OECD work, but have noted that any initiatives to protect the New Zealand tax base from BEPS will be a key focus in determining the
tax policy work program. The improvement to the transfer pricing rules on intangibles has been noted as an area of interest to IRD in the
IRD’s Compliance Focus for Multinational Enterprises (October 2013).
IRD has recognized that its disclosure requirements are light compared to many jurisdictions. IRD is currently examining initiatives that
could be taken to improve the quality and usefulness of tax information collected by IRD. Under consideration is a form of declaration
that would seek to collect key performance metrics, specific high-risk items (for example, cross-border interest payments) and group
membership details. An annual transfer pricing disclosure form is not currently being considered. IRD is also looking at earlier filing of
large corporate tax returns, minimum information required in financial statements filed with a tax return and possible voluntary code of
practice on taxation for large corporates.
Worldwide transfer pricing reference guide
213