Tax Policy Bulletin

OECD agreement on range of new Pillar Two safe harbours

On 5 January 2026, the OECD announced that 147 countries and jurisdictions working together within the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting have agreed on key elements of a package of administrative guidance under the Pillar 2 GloBe rules. The package includes:

• a permanent simplified Effective Tax Rate (ETR) safe harbour;  
• a one-year extension of the transitional Country-by-Country reporting safe harbour;  
• a substance-based tax incentive safe harbour;  
• a Side-by-Side (SbS) safe harbour and an Ultimate Parent Entity (UPE) safe harbour for eligible countries, and  
• a commitment to conduct future stocktakes of the SbS and UPE safe harbours.

You can read PwC US’ publications on the announcement, the simplified ETR safe harbour, the substance-based tax incentive safe harbour and the SbS safe harbour system.

New Year, New UOMI Rates

The Taxation (Use of Money Interest Rates) Amendment Regulations (No 2) 2025 (SL 2025/310) introduced reduced UOMI rates, effective 16 January 2026:

• Taxpayers’ paying rate of interest on unpaid tax has decreased from 9.89% to 8.97% per annum.
• The Commissioner’s paying rate of interest on overpaid tax has decreased from 3.27% to 2.25% per annum.

Other recent announcements

• Targeted policy consultation on not-for-profits – In November 2025 Inland Revenue began targeted consultation on the technical design of policy proposals relating to the not-for-profit (NFP) sector. While the consultation material has been shared with tax professionals and a cross-section of NFP groups, Inland Revenue is aware of wider public interest.

Open consultations

• Consultation on taxation of company loans to shareholders – Inland Revenue has launched public consultation on proposals to improve the way new loans by companies to shareholders are taxed. The main proposal is for a new time limit rule that would treat certain shareholder loans as dividends if not repaid within 12 months from the end of the income year they were made. This proposal would only apply to new loans, not existing ones, and only when a company’s total lending to shareholders is $50,000 or more. Consultation closes 5 February 2026. 
• PUB00477 GST treatment of short-stay accommodation – This draft interpretation statement discusses the GST treatment of short-stay accommodation provided by hosts either through an electronic marketplace (such as Airbnb or Bookabach) or directly to guests. The statement approaches GST from the perspective of someone considering providing short-stay accommodation for the first time, and follows the lifecycle of a taxable activity of providing short-stay accommodation from initial registration through to de-registration. Consultation closes 16 February 2026.
• PUB00516 GST - Court-awarded costs and disbursements – This draft interpretation statement considers whether court-awarded costs and disbursements and out-of-court settlement payments for costs and disbursements are subject to GST. This statement does not consider the GST treatment of court awards and out-of-court settlement payments more generally (eg, payments of damages). Consultation closes 20 February 2026.
• PUB00522 GST financial services – Services supplied in relation to retirement schemes – This interpretation statement considers the GST treatment of services that the manager of a retirement scheme supplies to the scheme and that third-party outsourced providers supply to the manager of a retirement scheme. In both cases the key issue is whether the supplies are exempt supplies of financial services. Consultation closes 27 February 2026.
• IRRUIP18 Income tax – wrapping, bridging, lending, borrowing and staking cryptoassets – This issues paper sets out the Commissioner’s initial views on the income tax consequences arising from common decentralised finance (DeFi) transactions such as wrapping, bridging, lending, borrowing and staking. The main issue that arises is whether these activities involve disposals of cryptoassets and acquisitions of different cryptoassets for tax purposes. Consultation closes 12 March 2026.

Recently closed consultations

• PUB00515 GST treatment of supplies of payment processing or facilitation services to merchants – The interpretation statement outlines how GST applies to entities providing payment processing or facilitation services, such as PSPs and BNPL providers. It provides a framework to determine whether services provided to merchants are financial services. When the supply to merchants includes settlement services, there will be a supply of financial services, and these supplies will be GST exempt (or zero-rated if applicable). The statement also explains whether there is a single supply or multiple supplies of services that may have different GST treatments. Consultation closed 8 December 2025.
• PUB00513 Working for Families tax credits and family scheme income – This interpretation statement gives an overview of eligibility for Working for Families tax credits and discusses the adjustments required to a person’s net income to determine family scheme income. Consultation closed 9 December 2025.
• PUB00507 When does the fringe benefit tax exclusion for benefits relating to health or safety apply? – This QWBA explains how the FBT exclusion for benefits relating to health or safety applies.  This QWBA is relevant to employers who provide their employees with benefits as part of their duty to manage risks to health or safety in the workplace.  For the exclusion to apply, there must be a connection between the benefit and the employer’s duty to manage risks to health and safety under the Health and Safety at Work Act 2015.  This QWBA complements the General Article on the health and safety FBT exclusion (2018) by providing more detailed guidance. Consultation closed 12 December 2025.
• PUB00501 Tax Administration – shortfall penalties - These two interpretation statements with accompanying reading guide and facts sheets set out the Commissioner's view on the evasion shortfall penalty and the abusive tax position shortfall penalty. The interpretation statements have been updated for case law and legislative changes. The first interpretation statement explains the shortfall penalty when a person evades the assessment or payment of tax, or does any of the similar acts specified in s 141E of the Tax Administration Act 1994.  The second interpretation statement explains the meaning of “abusive tax position” in relation to the abusive tax position shortfall penalty in s 141D(7) of the Tax Administration Act 1994. These two statements complete the draft guidance on shortfall penalties. Consultation closed 15 December 2025.
• EDO266 Tax Depreciation Rate for batter energy storage systems – This draft determination proposes a provisional depreciation rate for a new asset class of modular batter energy storage systems used by the power generation industry and in national grid electricity distribution networks. Consultation closed 18 December 2025. 
• PUB00470 Income tax – payments by employers on the death of an employee to executors and family – This interpretation statement considers whether amounts paid by employers on the death of an employee are taxable to the recipients, which could include executors and family members. The statement also considers the deductibility of payments made by employers, whether employers have PAYE obligations in respect of payments, and the duties of executors to file tax returns for the deceased employee and any estate that may arise. Consultation closed 30 January 2026.
• Income tax treatment of software development expenditure and SaaS customisation and configuration costs Officials are seeking feedback to gain a better understanding of whether the current tax treatment of both software development expenditure and software as a service (SaaS) customisation and configuration costs leads to the correct outcomes. Consultation closed 30 January 2026.

For more information about upcoming consultations please see here for Tax Technical and here for Tax Policy.