New Zealand

Basic taxes (briefly)

Personal tax 10,5-39%
Corporate tax (in detail) Corporate income tax is levied at a flat rate of 28%.
Capital gains tax. Details
VAT. Details GST is similar to VAT. The tax rate is 15%.
Other taxes Employee Benefit Tax, Social Contributions, Property Taxes
Government fee
Stamp duty No

International tax agreement

Tax treaties entered Australia, Austria, Belgium, Canada, Chile, China, Chinese Taipei, Czech Republic, Denmark, Fiji, Finland, France, Germany, Hong Kong, India, Indonesia, Ireland, Italy, Japan, Korea, Malaysia, Mexico, Netherlands, Norway, Papua New Guinea, Philippines, Poland, Russian Federation, Samoa, Singapore, South Africa, Spain, Sweden, Switzerland, Thailand, Turkey, United Arab Emirates, United Kingdom, United States of America, Canada, Papua New Guinea, Viet Nam
   
Tax Exchange Information Agreement (TEIA) Anguilla, Bahamas, Bermuda, Cayman Islands, Cook Islands, Curaçao, Dominica, Gibraltar, Guernsey, Isle of Man, Jersey, Marshall Islands, Niue, Saint Kitts and Nevis, Saint Vincent and the Grenadines, Samoa, Sint Maarten, Turks and Caicos Islands, Vanuatu, Virgin Islands (British)


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TAXATION

General Info

Key features of New Zealand’s tax system include:
  • No inheritance tax
  • No general capital gains tax (it can apply to some investments)
  • No local or state taxes apart from property rates paid to local authorities
  • No payroll tax
  • No social security tax
  • No health care tax, apart from a minimal accident compensation tax.

Personal Income Tax

Personal income tax in New Zealand is taxed on the worldwide income of resident individuals with a foreign tax credit available for foreign income tax paid, and on New Zealand- source income of non-residents.
Personal income tax is levied at progressive rates:
Income, NZ$ Rate
0 to 14,000 10.5%
14,001 to 48,000 17.5%
48,001 to 70,000 30%
from 70,000 33%

Tax is deducted at source for wage and salary earners.
Tax year is from 1 April to 31 March. Tax on employment income is withheld by the employer under the PAYE system and remitted to the tax authorities.

Corporate tax

Corporate income tax is levied on the worldwide income of resident companies and only on New Zealand-source income of nonresident companies.
Taxable income is calculated by deducting allowable deductions from assessable income. Assessable income from carrying on a business normally includes gross income from the sale of goods, the provision of services, most dividends, interest and royalties. Deductions are allowed for expenses incurred in gaining assessable income or conducting business for the purpose of gaining or producing assessable income for any income year.
Corporate income tax is levied at a flat rate of 28%.

Capital gains tax

There is no capital gains tax in New Zealand, although certain gains arising from the disposal of personal property that are related to a business and property purchased with the intention of resale will be taxable. Gains on the sale and transfer of land may be taxable in certain cases.

Losses

Losses may be carried forward indefinitely, subject to a 49% continuity of ultimate share ownership requirement. It generally is possible to carry forward part-year losses. Losses may not be carried back.

Dividends

New Zealand operates a full imputation tax system, whereby the payment of corporate tax is imputed to shareholders who are relieved of their tax liability to the extent profits taxed at the corporate level. Dividends received by a company from a wholly owned group member generally are exempt. Foreign-source dividends received by resident companies generally are exempt from income tax, subject to some exceptions.

Foreign tax credit

A foreign tax credit may be allowed against New Zealand income tax applicable to overseas income, but the credit is limited to the lesser of the actual overseas tax paid on the overseas income and the New Zealand tax applicable to that income.

Incentives

There are no specific incentive schemes, but tax legislation provides some industry-specific concessions for farming, mining, forestry, insurance, petroleum, environmental protection, venture capital and film production.

Tax year

The standard tax year runs from 1 April to the following 31 March, although a company can apply to have a non-standard balance date to align income and tax year- ends.

GST

In New Zealand Value Added Tax is called Goods and Services Tax (GST)/ It is a broad-based tax applied to the total value of goods and services, whether intermediate or final, including imported goods and, in some cases, imported services.
Companies that are registered for GST purposes generally can recover the GST paid on the inputs it has consumed in its taxable business operations.
Standard rate of GST is 15%. There are some types of sales where GST is not added to the price; these include “zero- rated” supplies (such as exports, international passenger transport and certain international services) or “exempt” supplies (e.g. financial services, residential rents and the sale of a building used for residential letting).

GST Registration

A company in New Zealand is required to register for GST if it carries out a taxable activity and if its turnover:
  • was over $60,000 for the last 12 months, or
  • is expected to go over $60,000 for the next 12 months (This equates to $5,000 per month), or
  • was less than $60,000, but GST is included in company’s prices, for example taxi drivers who have included 15% in their taxi fares.

The company can choose to register for GST even if its annual turnover is less than $60,000.
If a company is required to register for GST, it must apply within 21 days of becoming liable.

GST tax period and returns

GST returns must be filed monthly, bimonthly or every six months by each registered person, depending on the annual value of the supplies made. Generally, returns must be filed and GST paid by the 28th of the month following the end of the taxable period.

Withholding tax

Withholding tax rate depends on a type of income paid to a non-resident:
Type of Income Rate
Dividends (not fully imputed) 30%
Dividends (fully imputed) 0% if a non-resident has a 10% or more voting interest in the company, if no – 15%
Interest 15%
Royalties 15%
Technical Service Fees No

Stamp duty

Stamp Duty is not levied in New Zealand.

Government fee

When filing an annual return each company in New Zealand should pay an annual return fee of $45, this includes a $25 registration fee, a $10 FMA (The Financial Markets Authority) levy and a $10 XRB (The External Reporting Board) levy.

Other taxes and duties

There are no other taxes in New Zealand except from social security contributions which are levied at a minimum rate of 3% of gross pay for both employer and employee. Besides, an employer is required to pay fringe benefits tax (FBT) on the value of fringe benefits (e.g. motor vehicles and low-interest loans) provided to their employees at a rate of up to 49.25%.

Anti-avoidance rules

Transfer pricing: New Zealand’s transfer pricing rules apply to cross-border transactions between associated persons. The rules aim to prevent companies from avoiding taxes by fixing artificial prices in transactions with related companies in different tax jurisdictions. The rules and administration of the transfer pricing rules are broadly based on the OECD’s transfer pricing guidelines, although there is no specific guidance on the attribution of income to branches or permanent establishments in New Zealand. New Zealand’s tax authorities have the power to adjust the pricing of transactions that are considered to not be at arm’s length.
Thin capitalization: Interest deductions claimed against New Zealand assessable income for companies are limited where an entity’s debt exceeds certain thresholds: a New Zealand debt percentage that exceeds 60% of the group’s total New Zealand assets and a worldwide debt percentage exceeding 110%.
Controlled foreign companies: Certain New Zealand resident shareholders may be required to impute foreign income in the absence of the direct derivation of the income. The CFC regime applies where a group of five or fewer residents owns more than 50% of an offshore company, or has effective control of the company. An active income exemption applies for income years beginning on or after 30 June 2009. No attribution of passive income is required for CFCs if passive income of the CFC is less than 5% of total income. Where the CFC rules apply, the New Zealand resident shareholder is required to attribute CFC income proportionate to the shareholder’s income interests in the CFC.
Disclosure requirements: Certain taxpayers in New Zealand are required to keep and retain adequate records. While there is no legislative requirements for a taxpayer to prepare, keep or retain transfer pricing documentation, it could be used as evidence of compliance with the “arm’s length principle.”
Other New Zealand’s tax legislation contains a number of specific anti-avoidance provisions that are supplemented by a general anti-avoidance provision (GAAR). The GAAR operates as a “back-stop” to protect New Zealand’s tax base and may apply to arrangements that have the purpose or effect of avoiding tax.

Double Tax Agreements

New Zealand signed double tax agreements with 59 countries:
  • 40 DTS: Australia, Austria, Belgium, Canada, Chile, China, Chinese Taipei, Czech Republic, Denmark, Fiji, Finland, France, Germany, Hong Kong, India, Indonesia, Ireland, Italy, Japan, Korea, Malaysia, Mexico, Netherlands, Norway, Papua New Guinea, Philippines, Poland, Russian Federation, Samoa, Singapore, South Africa, Spain, Sweden, Switzerland, Thailand, Turkey, United Arab Emirates, United Kingdom, United States of America, Canada, Papua New Guinea, Viet Nam.
  • 20 TIEA: Anguilla, Bahamas, Bermuda, Cayman Islands, Cook Islands, Curaçao, Dominica, Gibraltar, Guernsey, Isle of Man, Jersey, Marshall Islands, Niue, Saint Kitts and Nevis, Saint Vincent and the Grenadines, Samoa, Sint Maarten, Turks and Caicos Islands, Vanuatu, Virgin Islands (British).

Foreign exchange control

There are no foreign exchange controls in New Zealand.

ACCOUNTS

Accounting records

The board of a company must ensure that the company keeps accounting records. These records must:
  • correctly record and explain the company’s transactions;
  • at any time enable the financial position of the company to be determined with reasonable accuracy;
  • enable the directors to ensure that the company’s financial statements comply with the Financial Reporting Act 1993; and
  • enable the company’s financial statements to be readily and properly audited.

Financial statements

Presently, all companies registered in New Zealand, whether or not they are incorporated in New Zealand, must prepare financial statements that comply with the requirements of the Companies Act 1993 and the Financial Reporting Act 1993.
The Financial Reporting Act 1993 requires compliance with generally accepted accounting practice in New Zealand (NZ GAAP) within 5 months after the end of accounting year.
A New Zealand company may be required to file accounts with the Companies Office if it falls under one of the following categories:
  • 
If it is a 'large' company in which 25 percent or more of the voting shares are held by a company or body corporate incorporated outside New Zealand; or a subsidiary of a company or body corporate incorporated outside New Zealand; or a person not ordinarily resident in New Zealand;
  • 
If it is a subsidiary of a company or body corporate incorporated outside New Zealand.

Audit

The financial statements of all companies must be audited, except where shareholders unanimously resolve that no auditor be appointed. That exception does not apply to:
  • subsidiaries of foreign companies (if there is a New Zealand holding company, and then subsidiaries below that, then only the parent and consolidated financial statements of the New Zealand holding company need be audited)
  • companies controlled by overseas persons who hold more than 25% of the voting shares, whether directly or indirectly held
  • entities that raise funds from the public or are listed on New Zealand’s stock exchange ( issuers)
  • branches of foreign companies.

On the New Zealand Companies Office website (www.business.govt. nz/companies/learn-about/updating- company-details/financial-reporting) there is a Financial Reporting Calculator which allows one to independently check whether or not there is a need for an audit.

Annual Return

Generally speaking, Annual Return is a short review on the current state of the company, which is prepared by the company secretary annually. As a rule it includes the following information:
  • Incorporation information (registration date, registered address);
  • Information about directors and their resignation;
  • Information about secretaries and their resignation;
  • Information about registered capital, nominal value of shares and amount of issued shares;
  • Information about shareholders and share transfer.


A limited liability company in New Zealand must file an annual return with the Companies Office as required by the Companies Act 1993 and it is an offence not to comply with this. If an annual return is not filed by the due date, the company risks being removed from the register as the Registrar may be satisfied that the company has ceased to carry on business.
When you incorporate your company you can choose the month the company will be required to file the annual return. You can also select a new filing month when you file the company's next annual return.
If you are unable to file your annual return by the due date, you can apply for a time extension. If granted, this will give you a further 20 working days in which to file your annual return.
A company is not required to file an annual return in the calendar year of its incorporation. For example, if a company is incorporated in 2014, its first annual return will be due in 2015.
Information to be contained in annual return is as follows:
  • the address of the registered office of the company;
  • the address for service of the company;
  • the postal address of the company;
  • if the share register is divided into 2 or more registers kept in different places, the place in which each register is kept;
  • information relating to the shares in the company;
  • the full names and residential addresses of the directors of the company;
  • the names and addresses of all shareholders of the company;
  • in the case of a company which has passed a resolution that no auditor be appointed, the text and date of the resolution;
  • the date of the last annual meeting of the company;
  • other.

Tax returns

The standard tax year runs from 1 April to the following 31 March, although a company can apply to have a non-standard balance date to align income and tax year- ends.
The tax liability of a company generally is paid in three provisional tax installments during the year in which the income is earned. The date on which installments are due depends on the balance date. The amount payable depends on the taxpayer’s income level in the previous year. For “provisional taxpayers”, payments will generally be made on the 28th of the fifth, ninth and 13th months after the start of the income year.
A sliding scale of penalties applies for abuse of the tax system.

    Taxes of New Zealand

    Min. rate for corporate tax 28%
    Capital gains tax Regular rate
    VAT 15%
    Withholding tax 0-15-30%/15%/15%
    Exchange control No
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