New Zealand: Summary of implementation of Pillar Two GloBE rules

New Zealand has enacted the Pillar Two global anti-base erosion (GloBE) rules into domestic law, effective for income years beginning on or after January 1, 2025. These rules mandate that in-scope multinational groups (MNEs), including those headquartered in New Zealand, pay a minimum of 15% tax on their income in each jurisdiction they operate.

Overview of GloBE Rules

The GloBE rules apply to multinational enterprises with an annual global turnover exceeding €750 million (approximately NZD 1.3 billion) in at least two of the four preceding income years. The rules are effective for income years starting on or after January 1, 2025. They require complex effective tax rate (ETR) calculations that differ from traditional methods, making reliance on financial statements insufficient. If the ETR in a jurisdiction falls below 15%, a top-up tax is imposed, following a hierarchy of rules including the qualified domestic minimum top-up tax (QDMTT), the income inclusion rule (IIR), and the undertaxed profits rule (UTPR). Additionally, there are safe harbours that provide simplified compliance measures under certain conditions.

Implementation approach

New Zealand has incorporated the GloBE rules by reference—meaning that any amendments to the OECD Commentary and Administrative Guidance will automatically form part of New Zealand domestic law, unless the government regulates to exclude the amendments. A domestic income inclusion rule (DIIR) (instead of a QDMTT) applies to New Zealand headquartered MNEs with low-taxed New Zealand income, effective from January 1, 2026. Inland Revenue has the authority to issue binding rulings on the application of the GloBE rules.

Registration and compliance requirements

Each constituent entity (CE) in New Zealand must register with Inland Revenue within six months after the first fiscal year of being in-scope. If the GloBE information return (GIR) is not filed in another jurisdiction with an exchange agreement, it must be filed in New Zealand. the multinational top-up tax return (MTTR) is required regardless of top-up tax liability, with specific filing deadlines. The top-up tax payment is payable in a single instalment, aligned with MTTR filing deadlines. Financial reporting must consider new requirements under NZ IAS 12 amendments.

Penalties for non-compliance

There is a maximum penalty of NZD 100,000 for non-compliance, and a NZD 500 penalty for late or incomplete MTTR filing. Other shortfall penalties may also apply.

Read an October 2024 report prepared by the KPMG member firm in New Zealand