New Zealand has embraced global tax transparency standards, including the OECD’s Base Erosion and Profit Shifting (BEPS) initiatives. In line with BEPS Action 13, the country has implemented Country-by-Country Reporting (CbCR) obligations to ensure that multinational enterprises (MNEs) disclose their global activities, profits, and taxes. This is part of New Zealand’s effort to prevent tax avoidance and ensure that MNEs pay their fair share of taxes where their economic activities occur. This guide aims to assist Chief Financial Officers (CFOs) and financial executives of MNEs based in or operating through New Zealand in understanding whether CbCR regulations apply to them and how to comply.

Applicability of CbCR in New Zealand

Criteria for Reporting:

• CbCR obligations in New Zealand apply to multinational enterprise groups with annual consolidated group revenues of €750 million or more (NZD 1.2 billion) in the previous fiscal year.
• The ultimate parent entity of an MNE group that is tax resident in New Zealand is required to file a CbC report if the group meets the revenue threshold.
• If the ultimate parent entity is not located in New Zealand but there is a constituent entity in the country, the local entity may be required to file the CbC report as a surrogate parent entity if the jurisdiction of the ultimate parent does not meet CbCR standards or does not exchange information with New Zealand.

Relevant Legislation:

• CbCR requirements in New Zealand are outlined under the Tax Administration Act 1994 and subsequent amendments, which incorporate the OECD’s BEPS Action 13 guidelines into the local legal framework.
• These regulations mandate that MNEs provide detailed information on their global allocation of income, taxes, and business activities by jurisdiction.

Reporting Requirements

Information to be Reported:

• MNEs required to file a CbC report must disclose the following information for each tax jurisdiction where they operate:
  • Total revenues (including related-party and unrelated-party revenues)
  • Profit or loss before income tax
  • Income tax paid and accrued
  • Stated capital and accumulated earnings
  • Number of employees
  • Tangible assets (excluding cash or cash equivalents)
• Additionally, the CbC report must list all constituent entities within the group and describe the main business activities of each entity.

Form and Submission:

• The CbC report must be submitted in XML format, following the OECD’s standardized format for CbCR.
• Reports are submitted electronically to the New Zealand Inland Revenue (IRD) through its online platform, which supports the submission and exchange of tax information.
  • For more information on submission procedures, visit the New Zealand Inland Revenue (IRD) website.

Filing Deadlines

• The CbC report must be filed within 12 months after the end of the reporting fiscal year. For example, if the fiscal year ends on 31 December 2023, the CbC report must be submitted by 31 December 2024.
• If the MNE is not the ultimate parent entity, it must notify New Zealand’s IRD about the filing entity responsible for submitting the report by the end of the fiscal year.

Penalties for Non-Compliance

Penalties:

• New Zealand enforces penalties for non-compliance with CbCR obligations:
  • Fines for failure to file or late submission can reach NZD 100,000 or more, depending on the severity of the breach.
  • Providing false or incomplete information can also result in penalties and could lead to further investigation or audit by the New Zealand Inland Revenue.
• These penalties are designed to encourage transparency and ensure that MNEs comply with the global reporting standards.

Defences:

• MNEs may argue reasonable cause for delays or errors in filing, such as technical issues, but the final decision lies with the New Zealand Inland Revenue. Each case is reviewed on its individual circumstances, and leniency may be granted under certain conditions.

Confidentiality and Use of Information

Data Protection:

• CbC reports filed in New Zealand are treated as confidential. The information is used exclusively for high-level risk assessment purposes by the tax authorities to evaluate potential base erosion and profit shifting (BEPS) risks.
• New Zealand exchanges CbC reports with other jurisdictions under the Multilateral Competent Authority Agreement (MCAA) and other information exchange agreements. This ensures that the data is only shared with countries that have adequate confidentiality and data protection standards in place.
• The information collected is not used for tax assessments but serves as a tool for tax authorities to identify potential areas of risk.