New Zealand tax system: audit, reporting and optimization of taxation of New Zealand companies and individuals: VAT, income tax and capital gains
Basic taxes (briefly)
|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|
International tax agreement
|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|
|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)|
Personal income tax
New Zealand tax residents pay income tax on their worldwide income, and non-residents pay income tax on New Zealand sourced income.
Income tax is levied on a progressive scale at the following rates:
- Income up to NZD 14,000 – 10.5%;
- Income from NZD 14,000 to 48,000 – 17.5%;
- Income from NZD 48,000 to 70,000 – 30%;
- Income from NZD 70,000 to 180,000 – 33%;
- Income over NZD 180,000 – 39%.
Capital gains from the sale of assets are normally included in the general tax base. There are certain exemptions. Thus, income from the sale of shares of New Zealand companies is tax exempt, except in the cases of active trading in securities. In addition, when receiving dividends from New Zealand companies, personal income tax on such income may be reduced by the corresponding portion of the corporate income tax paid by the New Zealand company. On the other hand, when investing in foreign shares, tax is paid according to special rules; the most common method is including in the tax base a certain percentage (5%) of the market revaluation of the investment. There are exceptions. The tax base may include unrealized revaluation of foreign currency assets.
Corporate income tax
New Zealand companies are taxed on their worldwide income, and foreign companies are taxed on New Zealand sourced income.
The corporate income tax rate is 28%.
The gains from the sale of shares are tax exempt, unless generated by active trading operations. Dividends from foreign companies with more than 10% participation are generally tax exempt, however, undistributed “passive” profit of such companies may be included in the tax base of the New Zealand shareholder under special rules.
A controlled foreign company (CFC) is a foreign company in which 5 or fewer New Zealand residents hold directly or indirectly more than 50% participation, or over which a single New Zealand resident has control (participation of more than 40%, without a non-resident holding an equal or greater participation).
The CFC’s undistributed “passive” profit is included in the taxable income of the New Zealand residents; however, the profit of CFCs with active business abroad (passive income being less than 5% of the total income) is tax exempt.
Withholding tax on dividends may be 0% in the case of at least 10% participation, or 15% in the case of participation below 10% (subject to the determination of income taking into account the corporate income tax of the distributing company), or 30% in other cases. The withholding tax rate for interest and royalties is 15%.
Withholding tax may be charged on certain other types of income.
The tax rates can be reduced under double tax treaties (DTT).
Goods and services tax (GST)
GST is similar to VAT. The tax rate is 15%.
Fringe benefit tax
Employers pay fringe benefit tax on various fringe benefits (cars for personal use, loans at preferential rates, health insurance, etc.) provided to their employees at special rates.
Social security contributions
Employers and employees pay premiums for insurance against work-related accidents; the rates vary by industry, and there are remuneration thresholds for charging the premium. Employees also pay premiums for insurance against non-work accidents at a rate of 1.39% of remuneration up to a maximum of about NZD 131,000.
Employees can voluntarily join certain retirement savings plans. In this case, potentially, the employer is also obliged to pay a certain minimum pension contribution for the employee. The employer's contributions to pension funds are usually subject to a special tax deducted from the employee’s remuneration at the corresponding progressive tax rates.
Real estate taxes are levied by local authorities.
The sale by non-residents of New Zealand residential property is subject to withholding tax calculated using special rules. There may be exemptions for long-owned properties.
There is no stamp duty in New Zealand.
Double taxation treaties
Singapore has signed tax treaties:
40 DTCs: 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 TIEAs: 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).
There are generally no restrictions on foreign exchange transactions.
Taxes of New Zealand
|Min. rate for corporate tax||28%|
|Capital gains tax||Regular rate|