New Zealand: Consultation on updated guidance on taxation of royalties paid to nonresident software suppliers
Not intended to change existing guidance, but rather to update terminology, analysis, and examples
October 6, 2026
Inland Revenue released draft guidance for public consultation on the income tax treatment of payments made by New Zealand residents to nonresident software suppliers.
The draft guidance, which will replace Inland Revenue’s 2003 guidance once finalized, is not intended to change existing guidance, but rather to update terminology, analysis, and examples to reflect modern software and cloud-based business models.
- The draft guidance continues to apply a transactional analysis, dependent on the legal rights and obligations arising under the arrangement, including what the supplier provides, what the customer or intermediary is permitted to do, and whether any copyright rights, know-how, or other intellectual property (IP) rights are transferred or made available.
- Consistent with Inland Revenue’s earlier guidance and the OECD Commentary, the acquisition of software copies for ordinary business or personal use will generally not involve the payment of a royalty.
- Similarly, an intermediary that merely facilitates or on-sells customer access will not ordinarily make a royalty payment solely because it participates in distributing the software.
Read an October 2026 report prepared by the KPMG member firm in New Zealand