Page 88 - Export and Trade

Taxation

goods sold, services provided, funds lent
and so on. Tax authorities are concerned
that transfer pricing may be used as a way
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and so have reasonably tight rules in this
area.
Generally, tax authorities expect
that any intercompany services will be
transacted on an arm’s length basis and
that a reasonable level of analysis will go
into determining an arm’s length price. The
analysis would be shown in documentation
that would be provided as evidence should
the tax authorities query it further.
Note also that tax authorities are
getting stricter with their transfer pricing
documentation requirements. In this
country, Parliament currently has a Bill
before it planning to tighten transfer
pricing documentation requirements of any
business engaging in cross border activity.
Structuring
The negative impact of the income tax
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somewhat by getting a good corporate
structure in place prior to commencing
exporting. Your business structure should
be designed in such a way that double
taxation is reduced as much as possible
and that an appropriate amount of tax is
paid by your business.
Tax should not be the only factor that is
considered in designing a structure. A good
business structure also considers issues
around liability, other legal obligations
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management.

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Forewarned is forearmed. While the
issues discussed above are complex,
your tax advisor should be able to guide
you through these issues. This can form
the basis of a conversation with your tax
advisor when starting your export journey.

86 NZ Export & Trade Handbook 2018