New Zealand Updates Draft Global Minimum Tax Law & Delays Domestic IIR to 2026

General

On March 11, 2024, the Finance and Expenditure Committee of the New Zealand Parliament made a number of amendments to the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Bill to implement the Pillar Two Global Minimum Tax.

This is to be known as the ‘Multinational Top-Up Tax’ and consists of an Income Inclusion Rule (IIR) and an Undertaxed Profits Rule (UTPR).

New Zealand is taking a similar approach to Switzerland and Liechtenstein and is directly transposing the OECD Model Rules (and Commentary and other agreed guidance) into domestic law in order to reduce the risk of interpretive errors and mismatches between the GloBE rules as adopted in other countries and as adopted in New Zealand. 

There are a number of key changes from the original draft, including a delay of the domestic income inclusion rule to January 1, 2026 (the original draft included a specific Domestic Income Inclusion Rule (DIIR) for domestic headquartered MNE Groups (which is not the same as a QDMTT)).

Interpretation of the OECD Model Rules