Being an active steward of the things we’re responsible for is one of our key roles. We think of stewardship in a wide sense. It includes the legislation and products we administer, the systems, processes and assets we’re responsible for and the capabilities of our people.
For IR, stewardship means actively balancing delivering on today’s demands with positioning our organisation to meet the demands of the future. Our stewardship work falls into 3 main areas—product and regulatory stewardship, policy stewardship and organisational stewardship—and is closely aligned with our strategy, planning and risk work.
A small team was set up for 1 year from 1 July 2024 to provide leadership and support for this work. The team will test concepts and learn by doing to determine what ongoing capability may be needed to ensure we fulfil our stewardship responsibilities.
Addressing global tax issues
A large programme of work is underway to ensure New Zealand plays its part in global initiatives on transparency, the effective exchange of information and international collection assistance.
As new ways of earning income emerge, new international tax risks arise. We work with international organisations and New Zealand’s tax treaty partners to support international efforts to ensure that everyone pays their fair share of tax.
Crypto-assets
Tax authorities do not currently have full visibility of income earned offshore through crypto-assets—digital representations of value that can be transferred, stored or traded electronically.
To resolve this, the Organisation for Economic Co-operation and Development (OECD) has developed a Crypto-Asset Reporting Framework (CARF) which requires intermediaries, such as crypto-asset exchanges, brokers and dealers, to provide tax authorities with income information on the users who operate through them.
IR will receive information about the activities of crypto-asset users who are tax residents of New Zealand and share information with other tax authorities who have implemented the CARF about users who are tax residents in their jurisdictions.
Subject to legislation, the CARF will apply in New Zealand from 1 April 2026, with the first information exchanges taking place in early 2027. This provides sufficient time for crypto-asset service providers to have the required reporting systems in place.
We will use the information received to support greater tax compliance and ensure New Zealanders pay the right amount of tax on their crypto-asset income. As you can read on the page below, IR is already using data and tools to identify crypto-asset users and holdings.
Global Anti-Base Erosion Rules
The Global Anti-Base Erosion Rules (GloBE rules) impose a global minimum corporate income tax which operates as a top-up tax. It applies to multinational corporate groups with a turnover in excess of €750 million a year and is only imposed on income that is not already taxed at an effective rate of at least 15%.
The tax will reduce the incentive for multinational companies to move income to countries where it is subject to a lower tax rate.
In New Zealand, it will apply to income earned on or after 1 January 2025.
Online casino gambling tax
From 1 July 2024, a 12% offshore gambling duty applies to online gambling provided by offshore operators to New Zealand customers. This ensures offshore gambling operators pay their fair share of tax.
New Zealand has arrangements with other countries that we use to exchange information with foreign tax authorities. These arrangements can be used to identify offshore gambling operators and seek assistance from other tax authorities to ensure compliance.
The Government has also made an in-principle agreement to regulate online casino gambling which will support tax collection, minimise harm and provide consumer protections to New Zealanders.
Supporting tax good governance
In April, IR hosted representatives from the European Commission who visited on behalf of the European Union (EU). They came to observe New Zealand's compliance with the EU’s Code of Conduct standards when it comes to tax good governance. The standards embrace transparency, fair taxation and implementation of the OECD base erosion and profit shifting minimum standards. Meeting these standards means New Zealand can continue to hold strong business and investment relations with EU member states.
The visit involved meetings with IR people, business representatives and the Minister of Revenue, as well as cross-government collaboration with Treasury and the Ministry of Foreign Affairs and Trade Manatū Aorere.
Given New Zealand’s excellent international track record, we are confident of a full clearance from the EU. They see New Zealand as very like-minded in respect of international tax policies and practices and they were encouraged by our promotion of tax good governance in the Pacific region.
The international Automatic Exchange of Information Peer Review Group
The international Automatic Exchange of Information Peer Review Group was established to review jurisdictions in terms of their compliance with the minimum international standard for exchange of financial account information.
The Group has representatives from 30 jurisdictions and is chaired by India, supported by vice-chairs from New Zealand and Switzerland.
IR hosted the 13th APRG meeting in Wellington Te Whanganui a Tara in late October, with over 60 participants. Feedback from attendees was positive, not only on the technical content covered but also towards IR as host and New Zealand as a country.