New Zealand: Additional amendments to August tax bill include new thin capitalization rules for infrastructure investments
Proposed to apply from 2026-2027 income year
An amendment paper to the Taxation (Annual Rates for 2025-26, Compliance Simplification, and Remedial Measures) Bill currently before Parliament has been released, which includes new thin capitalization rules applicable to infrastructure investments in New Zealand.
In particular, the new rules would exempt certain “eligible infrastructure” from the thin capitalization rules. Eligible infrastructure would be limited to tangible infrastructure used to provide essential services to the public or a class of users on a shared-use basis (e.g., used for transport, the energy sector, water management, telecommunication, waste management, or social purposes). Commercial buildings, as well as industrial buildings and dwellings, would be expressly excluded.
The exemption also would apply only to debt from unrelated third parties, with a limited exception for eligible infrastructure entities that listed on a stock exchange. In addition, an eligible infrastructure entity generally must not hold offshore investments, have operations in other jurisdictions, or any assets situated outside New Zealand.
The exemption would apply for the 2026−2027 and later income years.
Read a March 2026 report prepared by the KPMG member firm in New Zealand