New Zealand came a step closer to tax reform this week as it entered the third round of consultation on the reform of its international tax rules following the release of an issues paper proposing changes to the treatment of foreign dividends.
Finance minister Michael Cullen and revenue minister Peter Dunne said everything was ‘on track’ for the May introduction of a bill which would pave way for reform of NZ companies’ taxation of offshore subsidiaries.
Apart from its focus on the taxation of dividends received by NZ companies from overseas subsidiaries, the issues paper also looks at transitions and consequences resulting from the change to active income exemption, including the repeal of conduit rules and treatment of existing foreign losses and foreign tax credits, according to Tax-news.com.
The ministers said the current tax system was out of line with the tax systems of other countries, particularly Australia, which made it difficult for NZ businesses with overseas operations to compete effectively with similar businesses in other countries.
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