On September 6, 2016 the New Zealand Government released a discussion document on addressing hybrid mismatch arrangements. Via the document New Zealand Government seeks comments on how the OECD recommendations could be implemented in New Zealand. The Document is divided in 2 parts. Part I describes the problem of hybrid mismatch arrangements, the case for responding to the problem, and a summary of the OECD recommendations. Part II subsequently explains the OECD recommendations in greater depth and discusses how they could be incorporated into New Zealand law.
Submissions should be made by October 17, 2016. Submissions can be sent either by e-mail or by normal mail.
A.o. the following subjects are being discussed in the document:
· PART I - POLICY AND PRINCIPLES
o Chapter 1 - Background
§ Historic focus on the problem of double taxation
§ The problem of double non-taxation
§ G20/OECD Action Plan
§ Hybrid mismatch arrangements
§ OECD recommendations
§ Implementation of OECD recommendations
o Chapter 2 - Hybrid mismatch arrangements
§ Hybrid instruments
§ Hybrid entities
§ Indirect outcomes
o Chapter 3 - Policy issues
§ Global impact of hybrid mismatch arrangements
§ Uptake in other countries
§ Impact of hybrid mismatch arrangements on New Zealand
o Chapter 4 - OECD recommendations
§ Hybrid mismatch rules – OECD recommendations
§ Double tax agreement commentary
· PART II - DETAILS OF OECD RECOMMENDATIONS
o Chapter 5 - Hybrid financial instruments
§ OECD’s Recommendation 2 (changes to existing domestic rules)
§ OECD’s Recommendation 1 (issues relating to the linking rules)
§ Particular tax status of counterparty not relevant
§ Differences in valuation of payments not relevant
§ Timing differences
§ Taxation under other countries’ CFC rules
§ Application of rule to transfers of assets
§ Regulatory capital
§ Other exclusions
§ Application to New Zealand
o Chapter 6 - Disregarded hybrid payments
§ Requirements for rule to apply
§ Dual inclusion income
§ Carry-forward of denied deductions
§ Application of CFC regimes
§ Implementation issues
§ Application to New Zealand
o Chapter 7 - Reverse hybrids
§ Recommendation 4 (D/NI payments to reverse hybrids)
§ Recommendation 5 (Reverse hybrids)
§ Application in New Zealand
§ Recommendation 5.3: Information reporting
o Chapter 8 - Deductible hybrid payments
§ Application to New Zealand
o Chapter 9 - Dual resident payers
§ Application to New Zealand
§ DTA dual resident rule suggestion
o Chapter 10 - Imported mismatches
§ Non-structured imported mismatches
§ Application to New Zealand
o Chapter 11 - Design principles, including introduction and transitional rules
§ Design and interaction
§ General rule for introduction
§ Co-ordination with other countries
o Chapter 12 - Key definitions
§ Financial instrument
§ Structured arrangement
§ Related persons
§ Control group
§ Payment
Click here to be forwarded to the Government discussion document “Addressing hybrid mismatch arrangements” as available on the website of the New Zealand Inland Revenue, which will open in a new window.
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