New Zealand


New Zealand first enacted its Transfer Pricing legislation on December 12, 1995. New Zealand’s Transfer Pricing Rules are included in section GC of the Income Tax Act 2007.

In October 2000, the New Zealand Tax Agency issued Transfer Pricing Guidelines. This guidance is intended to complement the OECD Guidelines by providing additional information on compliance with the transfer pricing rules in New Zealand.

Arm’s Length Principle

The transfer prices adopted by a multinational directly affect the amount of profit earned by that multinational in each country in which it operates.

The New Zealand Transfer Pricing rules are based on the Arm’s Length Principle and are set out in Article 9(1) of the OECD Model Tax Convention.

Related Parties

New Zealand Transfer Pricing rules apply to cross-border arrangements between associated persons based on 50% or greater common shareholding interest or effective control.

Transfer Pricing Methods

The most appropriate pricing method must be selected, providing the most reliable measure of an Arm’s Length result in each case. New Zealand law provides five Transfer Pricing methods available for determining compliance with the Arm’s Length Principle:

  • Comparable Uncontrolled Price Method.
  • Cost Plus Method.
  • Resale Price Method.
  • Profit Split Method.
  • Transactional Net Margin Method.

The legislation does not impose a hierarchy for transfer pricing methods.

Transfer Pricing Documentation

There is no explicit legal requirement in New Zealand to prepare and maintain Transfer Pricing documentation; however, the taxpayer is responsible for demonstrating that the consideration is consistent with the arm’s length principle, facing the burden of proof.

Therefore, the Tax Agency expects taxpayers to prepare some form of documentation to evidence the Transfer Pricing determination and the application of the previous principle.

New Zealand supports the OECD approach for the Transfer Pricing documentation and accepts Master File and Local Report documentation prepared under this approach. There are no specific rules implemented yet for the maintenance or filing of the Local Report and the Master File documentation.

Country by Country Report

It applies to New Zealand-based corporate groups with annual consolidated revenue exceeding €750 million.

Each year, the Tax Agency will contact New Zealand-based corporate groups required to file the Country-by-Country Report and provide them with the required form and guidance notes with specific instructions.

Transfer Pricing Penalties

If a taxpayer has failed to prepare any Transfer Pricing documentation, the Tax Agency will assess either the taxpayer’s negligence, at a minimum (with a penalty of 20% under section 141C of the Tax Administration Act 1994), or has been seriously negligent (with a penalty of 40% under section 141C of the Tax Administration Act 1994) in its determination of an amount complying with the Arm’s Length Principle.

In addition, Transfer Pricing adjustments can be assessed up to four years after the end of the fiscal year the tax return was filed but can be extended to seven years if an audit commences within the statutory four-year period.

Source: Inland Revenue Department

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