OECD Pillar Two in New Zealand.

For global information on OECD Pillar Two and the global minimum tax for multinational groups in all markets, see Acclime Group’s guide.

New Zealand has enacted the OECD’s Pillar Two Global Anti-Base Erosion (GloBE) Rules through the Taxation (Annual Rates for 2023–24, Multinational Tax and Remedial Matters) Act 2024, which introduces a Multinational Top-up Tax and the 15% global minimum effective tax rate for large multinational enterprise (MNE) groups. The Income Inclusion Rule (IIR) and the Undertaxed Profits Rule (UTPR) apply for income years beginning on or after 1 January 2025.

New Zealand has not enacted a Qualified Domestic Minimum Top-up Tax (QDMTT). Instead, a narrower Domestic Income Inclusion Rule (DIIR) applies to New Zealand-headquartered groups from income years beginning on or after 1 January 2026. The rules are adopted by reference to the OECD GloBE Model Rules, Commentary and Administrative Guidance. This guide focuses on New Zealand’s implementation, filing obligations and local considerations.

At a glance

Local summary

New Zealand has adopted the IIR and the UTPR through the Multinational Top-up Tax, both effective for income years beginning on or after 1 January 2025. Where the jurisdictional effective tax rate (ETR) in a jurisdiction is below 15%, top-up tax may arise and be collected under the IIR or UTPR. Unlike most jurisdictions, New Zealand has not introduced a QDMTT. In its place, a Domestic Income Inclusion Rule applies from 1 January 2026, but only to New Zealand-headquartered groups with low-taxed New Zealand income.

Scope and key concepts

The GloBE Rules apply to MNE groups meeting the EUR 750 million consolidated revenue threshold. In New Zealand, the IIR and UTPR apply equally to New Zealand-parented and foreign-parented groups for income years beginning on or after 1 January 2025, where the global group meets the threshold, even if the New Zealand entity’s own revenue is much lower.

New Zealand adopts the GloBE Rules by reference to the OECD Model Rules, Commentary and Administrative Guidance, so subsequent OECD changes generally flow into New Zealand law automatically unless excluded by regulation. The rules also override New Zealand’s double tax agreements unless an agreement specifically refers to Pillar Two.

Local deviations

New Zealand’s most significant departure from the OECD norm is that it has not enacted a Qualified Domestic Minimum Top-up Tax. In its place, a Domestic Income Inclusion Rule (DIIR) applies from 1 January 2026, but only to the low-taxed New Zealand profits of New Zealand-headquartered groups. The DIIR uses the same tax base as the GloBE Rules and is conceptually similar to a QDMTT, but is narrower in scope.

As a result, foreign-parented groups are not subject to a New Zealand domestic top-up tax. Any top-up on low-taxed New Zealand income is instead collected by the parent’s jurisdiction under its IIR or, failing that, the UTPR. A further consequence of having no QDMTT is that groups whose Ultimate Parent Entity is in a jurisdiction with a qualified side-by-side regime (currently the United States) may obtain relief from the New Zealand rules for income years from 2026.

Compliance and filing obligations

In-scope groups with a New Zealand constituent entity have registration, information-return and, where applicable, top-up tax return obligations with Inland Revenue. The detailed format of some returns is still being finalised by Inland Revenue.

Key deadlines

The compliance obligations

Registration

Under sections 78H(1) and (3) of the Tax Administration Act 1994, an in-scope group with a New Zealand constituent entity registers with Inland Revenue within six months after the end of the first fiscal year in which it is subject to the GloBE Rules. Registration is handled through the GloBE account in myIR. Foreign-headquartered groups that will file the GIR in another jurisdiction notify Inland Revenue of this at registration, and update any later change to the GIR filing through myIR.

GloBE Information Return (GIR)

New Zealand-headquartered groups file the GIR in New Zealand, on the OECD standard template. Foreign-parented groups may instead have the GIR filed in another jurisdiction that exchanges it with New Zealand, provided Inland Revenue is notified. The GIR is due 18 months after the end of the first fiscal year the rules apply, and 15 months after the end of each subsequent fiscal year.

Multinational top-up tax return

A top-up tax return is required only where top-up tax is payable based on the GIR. Where there is no liability, a return may not be needed. Inland Revenue is still finalising the form and detailed requirements of this return.

Transitional safe harbours

New Zealand applies the OECD transitional CbCR safe harbour agreed by the Inclusive Framework in February 2023 (the de minimis, simplified ETR and routine profits tests), which are explained in the Group guide. The safe harbour must be claimed in the first fiscal year the rules apply in a jurisdiction. If it is not, it cannot be applied in later years.

Tax incentive impact

New Zealand has relatively few targeted tax incentives, and no specific incentive carve-outs apply under the GloBE Rules. To the extent any incentive or concession reduces a group’s effective tax rate below 15%, the shortfall may be recovered through top-up tax. The Substance-Based Income Exclusion may provide partial relief based on local payroll and tangible assets.

Monitoring, audit and disputes

Inland Revenue administers the Multinational Top-up Tax, and the Commissioner may issue binding rulings on the application of the GloBE Rules on application. Because the rules are adopted by reference to OECD guidance and some return forms are still being finalised, in-scope groups should monitor Inland Revenue updates and keep their data and calculations under review. Groups may pursue the usual dispute resolution routes against assessments or collection actions.

Key local issues

Two features of the New Zealand regime warrant particular attention: the penalties for non-compliance and the imputation credit treatment of top-up tax.

The treatment of imputation credits also differs by mechanism. Top-up tax paid under the DIIR gives rise to New Zealand imputation credits, whereas top-up tax paid under the IIR or UTPR does not. Foreign tax credits are available for tax paid under a foreign QDMTT, but not for IIR or UTPR top-up tax paid overseas. New Zealand-headquartered groups should factor this into imputation credit account planning.

Local contact

For advice on how Pillar Two applies to your group’s New Zealand operations, please contact Acclime New Zealand about our tax services regarding OECD Pillar Two.