New Zealand Proposes Time Limit on Company Loans for Fair Tax

New Zealand’s tax authority on Thursday requested public feedback on a proposal that would require shareholders to pay back new loans within a year, or be subject to tax.

Under the new proposal, loans that aren’t paid by shareholders back to companies will be taxed as dividends, the Inland Revenue said.

New Zealand is seeking to change the tax treatment of loans because shareholders will borrow large sums of money from a company and not pay them back. Under current tax rules, the borrowers pay less tax when they have an outstanding debt.

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