Tax Haven New Zealand

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New Zealand recently became the first country in the world to commence a free trade agreement with China. Other free trade agreements are in place with more in the pipeline. The New Zealand economy could not survive without trade. Trade must be serviced by banking services.

Research in the UK, as published in a recent edition of Emirates, notes major global hubs from which trade will physically be centered upon. At the second tier level, Auckland in New Zealand is tipped to become one of these nodes in the global network of the future, and this is already taking shape. This level of global trade must be serviced by relatively unfettered banking services.

New Zealand went through a major programme of tax reform in the 1980s. The top marginal rate of income tax was reduced from 66% to 33% (since increased to 39% in April 2000) and corporate income tax rate from 48% to 33% (reduced to 30% in 2008). An OECD report in 2001 described the New Zealand tax system as one of the most neutral and efficient within its membership.

Country Overview

Tax haven New Zealand is located in the Pacific Ocean and is a constitutional monarchy with a parliamentary democracy. The official statement of the structure of New Zealand’s constitution is found in the Constitution Act of 1986, although in reality a codified constitution is inexistent. As head of state, Queen Elizabeth of England is represented in the person of the Governor General who is appointed by the Queen herself on the Prime Minister’s advice. Queen Elizabeth of England bears the title of head of state and queen of New Zealand according to the Royal Titles Act of 1974.

The estimated population of tax haven New Zealand is 4.3 million, 78% of which consist of European ethnic groups. Several religious communities can be found in tax haven New Zealand, with Christianity being the most common religion and accounts for 55.6% of the population based on figures given from the census carried out in 2006 census. This figure however represents a drop from 60.6% according to the 2001 census.

Tax haven New Zealand’s economy is mainly based on the service sector which contributes 68.8% of GDP. Following the service sector, the construction and manufacturing industry accounts for 26.9% of GDP, whilst the farming and raw materials extraction sector contributes 4.3% of GDP. There are two official languages in tax haven New Zealand are English, spoken by 98% of New Zealanders and Maori, which is spoken by 4.1%. Other languages spoken in tax haven New Zealand are Northern Chinese, Samoan, Yue, Hindi and French.

On the subject of taxation, New Zealand already has in place a network of 34 double tax agreements in force with its main trading and investment partners aimed at reducing tax impediments to cross-border trade and investment and assisting with tax administration. Most of the world’s largest countries are included in these agreements.

Taxation in New Zealand is collected at a national level by the Inland Revenue Department (IRD) on behalf of the Government of New Zealand. National taxes are levied on personal business income, as well as on the supply of goods and services. There is no capital gains tax, although certain ‘gains’ such as profits on the sale of patent rights are deemed to be income.

New Zealand Fiscal Incentives and Advantages

Tax haven New Zealand is a low tax jurisdiction which is market efficient and oriented. Here is a list of benefits derived from New Zealand as an offshore and international business center for companies.

  • Low tax jurisdiction
  • Sound business principles and environment
  • Large number of business oriented and innovative scientists
  • First class development and infrastructure facilities
  • Broad network of free-trade agreements
  • Modern infrastructure for business
  • Flexible labour policies
  • Competitive telecommunications and property costs
  • Internationally competitive operation costs
  • Numerous business sectors in screen production, creative industries, food and beverage, ICT, wood processing, biotechnology and specialized manufacturing

New Zealand Offshore Legislative Framework

As a center for offshore and international business, tax haven New Zealand has preoccupied itself with ensuring that an adequate suite of laws are in place to deal with all aspects of New Zealand business. A lot has been done to achieve coherency within tax haven New Zealand’s fiscal regime, to avoid and fight against corporate criminal activity and to equip investors with the right corporate vehicles. New Zealand’s offshore legislative framework includes the Acts listed below:

  • Trustee Act 1956 No 61 (as at 01 July 2009), Public Act
  • Companies Act 1993 no 105 (as at 07 January 2010), Public Act
  • Partnership Act 1992 no 92 (as at 01 October 2007), Public Act
  • Limited Partnership Act 2008
  • The Lawyers and Conveyancers Act 2006
  • Companies Reregistration Act 1993 No 121 (as at 03 September 2007)
  • International Crimes and International Criminal Court Act 2000 No 26 (as at December 2009), Public Act
  • Financial Service Providers (Registration and Dispute Resolution) Act 2008

New Zealand Offshore and Financial Services

International and financial services in tax haven New Zealand include:

  • New Zealand Company formation
  • International banking
  • Fund management
  • Legal and financial counseling
  • Trust business
  • Insurance business

The Reserve Bank of New Zealand

Financial services in tax haven New Zealand are regulated by the Reserve Bank of New Zealand. The Reserve Bank of New Zealand is the country’s central bank and plays a key role in promoting a stable and dynamic financial system in tax haven New Zealand. As the agency in charge of the country’s monetary system, the central bank seeks to obtain price stability by implementing operating monetary policies, supervising and putting in place payment systems that are efficient, helping to ensure that the financial system is sturdy and efficient, identifying and meeting the demands of the public, making financial support services available. A key element of global banking business will be taxation. The current corporate tax rate in New Zealand (and that which would currently apply to New Zealand based banking services) is 30% on profits. This rate, in authors view, should be reduced to just 15% for banks that concentrate on servicing international banking business rather than domestic banking for the New Zealand public. The existing rate of 2% for the Approved Issuer Levy that applies to interest paid (instead of tax) on approved investments is a measure introduced years ago by a government that perceived the strategic value for attracting investment money with low tax in a stable jurisdiction.

Recent Developments

On January 1, 2010, the New Zealand Free Trade Area (AANZFTA) was made effective. The AANZFTA involving tax haven New Zealand is geared towards the establishment of a trans-Pacific free trade zone which will consist of approximately 600 million consumers along with a gross domestic product estimated at USD2.7 trillion. This agreement with tax haven New Zealand will present new investment opportunities for 12 member states, including Brunei.

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