fundamental same as status shift in our quo). interest limitation rules – taxpayers and agents would have to come to grips with an entirely new regime. + + Efficiency of ++ ++ 0 administration Option 1 would avoid the need for Option 2 would reduce the need to Option 3 Option 4 would potentially complex and expensive review the interest rates of taxpayers would reduce reduce the disputes over whether the interest rate utilising the safe harbour. For the administration need to review on related-party debt is set remaining taxpayers, the restrictions costs the interest appropriate. (e.g. striking out exotic terms) would because rates of simplify the transfer pricing analysis. there would taxpayers be less need utilising the to review and safe harbour. challenge related-party loans under transfer pricing. 0 + Sustainability + ++ 0 Option 1 would apply to taxpayers that Option 2 should generally only affect Option 3 Option 4 have structured their affairs to strip the taxpayers with more aggressive debt could result in not prevent maximum profits out of New Zealand; structures. interest firms from however, it could also affect the deduction achieving interest rates of less aggressive denial even if excessive taxpayers. a taxpayer interest rates has on related-party conservative debt. debt levels. Overall + ++ Recommended option 0 0 + assessment
fundamental shift in our interest limitation rules – taxpayers and agents would have to come to grips with an entirely new regime. same as status quo). Efficiency of administration ++ Option 1 would avoid the need for potentially complex and expensive disputes over whether the interest rate on related-party debt is set appropriate. ++ Option 2 would reduce the need to review the interest rates of taxpayers utilising the safe harbour. For the remaining taxpayers, the restrictions (e.g. striking out exotic terms) would simplify the transfer pricing analysis. + Option 3 would reduce administration costs because there would be less need to review and challenge related-party loans under transfer pricing. + Option 4 would reduce the need to review the interest rates of taxpayers utilising the safe harbour. 0 Sustainability + Option 1 would apply to taxpayers that have structured their affairs to strip the maximum profits out of New Zealand; however, it could also affect the interest rates of less aggressive taxpayers. ++ Option 2 should generally only affect taxpayers with more aggressive debt structures. 0 Option 3 could result in interest deduction denial even if a taxpayer has conservative debt levels. + Option 4 not prevent firms from achieving excessive interest rates on related-party debt. 0 Overall assessment + ++ Recommended option 0 + 0
2017-other-beps-16-ria-interest-july-2017.docx