New Zealand: Domestic Corporate Taxation
Scope of Income Tax
Taxable entities are resident companies (including limited partnerships) and the permanent establishments of non-residents that derive income in New Zealand.
A company is resident in New Zealand for tax purposes if:
- it is incorporated in New Zealand;
- control by company directors is exercised in New Zealand;
- it has its centre of day-to-day management in New Zealand; or
- it has its head office in New Zealand.
A permanent establishment is a fixed place of business through which the business of an enterprise is wholly or partly carried on. It includes a place of management, a branch, an office, a factory, a mine or any other place of extraction of natural resources, an agricultural or forestry property, and a building or assembly project that lasts more than six months.
If a company is conducting its business through an independent reseller, it is unlikely to have to pay income tax in New Zealand. If it utilises a commission agent or employee (who has the authority to enter into contracts on its behalf), it is likely to be deemed to have a permanent establishment in the country.
New Zealand-resident companies are liable for tax on their worldwide taxable income. Non-resident companies are taxed only on their New Zealand-sourced income.
Consolidation rules allow a group of companies wholly-owned by the same shareholders to elect to be treated as a single tax entity.