Contract research and development (R&D) and cost contribution arrangements
Most research and development ("R&D") by foreign-owned multinational enterprises ("MNEs") in New Zealand is carried out on a contract basis. In respect of contract R&D, we expect a fair and reasonable mark-up on costs incurred, especially given the considerable cost savings that arise from carrying out high quality activities in New Zealand.
We see very few material Cost Contribution Arrangements ("CCAs") in New Zealand.
Note
Such expenditure must not only comply with transfer pricing requirements but also satisfy the regular domestic deductibility rules (for example, capital expenditure and depreciation provisions).
Date published: 01 Dec 2010
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