Pearse Trust Blog

The New Zealand Inland Revenue Department (IRD) has released Public Ruling BR Pub 15/10, setting out the Commissioner's view on the New Zealand Goods and Service Tax (GST) treatment of directors' fees. A summary of the IRD’s interpretation follows below.

On 13 October 2015, the Minister for Finance Michael Noonan, delivered Ireland’s Budget for 2016 and also provided an “Update on Ireland’s International Tax Strategy”.

First proposed by Chancellor of the Exchequer George Osborne in his 2014 Autumn Fiscal Statement, the United Kingdom’s new Diverted Profits Tax (DPT) is intended to counter the use of “aggressive” tax planning techniques utilised by large multinational enterprises to divert profits from the UK. The Diverted Profits Tax was included in Finance Act 2015 and went into effect on 1 April 2015.

The UK tax authority, HM Revenue and Customs (HMRC), has clarified important changes to the way businesses in the financial industry with operations within and outside the UK calculate value-added tax.

Companies which are resident in Ireland are chargeable to Irish Corporation Tax on their worldwide profits and capital gains. In order for such companies to comply with the filing and payment obligations under Irish tax law, all companies are required to file a Corporation Tax Return for each accounting period. 

Ireland’s decision to join the EU in 1973 marked the introduction of Value Added Tax (VAT). VAT was implemented among all member states as the turnover tax within the “common market”, and as a means of policing VAT, the ‘VAT Information Exchange System’ (VIES) was introduced in 1993.

VIES operates as a system of administrative support to member states and ensures both the registration of companies for VAT as well as the correct rate of VAT being charged on all transactions.

For employers and investors, Chancellor of the Exchequer George Osborne’s Summer Budget contained quite a few surprises. Some of the more interesting measures are summarised here.

Corporate Tax To Fall Below 20%

At 20%, the UK already has the joint-lowest rate of corporate tax in the G20. However, Osborne was clear that "the country cannot afford to stand still while others rush ahead." So in something of an unexpected move, the Chancellor announced that corporation tax will fall to 19% in April 2017 and 18% in 2020. Osborne said the new rates will send out "loud and clear the message around the world: Britain is open for business."

An updated Double Tax Agreement (DTA) between Canada and New Zealand came into force on 26 June 2015. The new agreement will generally lower withholding tax (WHT) on dividends, interest and royalties between the two countries and has been welcomed by investors in both countries. The changes will begin to take effect from 1 August 2015.

New Zealand’s Budget 2015 announced by Minister of Finance, Hon Bill English on 21 May 2015,  is being called “a plan that’s working”. The budget highlighted a positive outlook for the economy and included a range of tax-related measures and investment initiatives.Some of these initiatives are aimed at New Zealand businesses and are being referred to as the “Business Growth Agenda”.

This blog will examine the tax considerations in relation to loans to participators. This anti avoidance measure attacks the practice of withdrawing profits from close companies in the form of loans. Without this measure it would be possible for shareholders in close company to borrow money from the company instead of taking remuneration or dividends.