are relatively few incentive schemes as such in
New Zealand aimed at foreign investment although
the government has made changes to the general
tax regime in 2008 aimed partly at encouraging
there are attractive incentives in the venture
capital sector and in forestry.
These are described separately.
filming a large budget production in New Zealand
may be eligible for assistance under the Large
Budget Screen Production Grant Scheme. This scheme
does not include tax incentives as such, although
any grants that are made are exempt from income
2008 tax package which reduced the coporate tax
rate from 33% to 30% also introduced a 15% tax
credit for research and development expenditure.
To qualify for the credit, a business must control
the R&D project, bear the financial and technical
risks of it, and own the project results. The
R&D must be carried out predominantly in New
credits will be paid out in cash to loss-making
businesses such as start-ups.
eligible for the tax credit includes the cost
of employee remuneration, the depreciation of
tangible assets used primarily in conducting R&D,
overhead costs, and the costs of consumables and
payments to entities conducting R&D on behalf
of the business.
incentives are available for investments in activities
that encourage export
expansion, regional development and employment.
These are provided directly by the government
in the form of financial support.
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New Zealand Approved Issuer Levy
The Approved Issuer Levy scheme permits a New
Zealand resident to pay interest to a non-resident
lender without having to deduct Non-Resident Withholding
Tax at 15%, and instead to apply a levy of just
2% to the gross interest paid.
this concession is contained in the New Zealand
Stamp and Cheque Duties
Amendment Act (No 2) 1991, which allows an "approved
issuer" to make written application to the
Commissioner for registration of:
any transaction involving money lent to that
approved issuer; or
(b) any class of transactions involving money
lent to the approved issuer.
can apply to be an Approved Issuer, and the conditions
are as follows:
the securities on which the zero rate of NRWT
is to apply must be registered using form IR397;
Issuer must not be
associated to the non-resident lender (very
The non-resident lender and the Issuer must
agree that AIL applies. We recommend that an
agreement in writing is made stating that AIL
who have a fixed establishment in New Zealand
are not liable for NRWT so zero-rating does not
Approved Issuer legislation can be used in setting
up what amounts to an offshore finance company,
which providing it is independent of the depositors,
can accept global deposits, earn high interest
(for example if invested in New Zealand in the
range of 7.75% - 10.5% for 12 months) and pay
the depositors a lesser interest rate.
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And Petroleum Extraction Companies
and petroleum mining companies have specific taxation
regimes under New Zealand law which give them
incentives to underpin development. Under a set
of rules introduced in 2004, and due to expire
in 2009, some types of revenue from extraction
activities are exempt from tax. Non-resident petroleum
companies are also able to use the deductibility
rules applying to branches (their favoured form
of entity in New Zealand) to offset non-New Zealand
expenses against local income.
government wishes to change this situation and
is currently reviewing the tax regime for extraction
companies. In particular, the government will
legislate to close the branch taxation loophole.
current law, New Zealand petroleum miners can
offset their expenditure in other countries against
the revenue from their New Zealand operations,”
Finance Minister Michael Cullen and Revenue Minister
Peter DunneDr Cullen and Mr Dunne said in March
“That means New Zealand might receive less
income tax than expected on profits from oil production
in New Zealand, which is particularly unacceptable
when oil production revenue from New Zealand is
at an all time high and predicted to grow.
safeguard our taxing rights on our petroleum resources,
the government will amend the Income Tax Act to
ensure that expenditure on petroleum mining operations
undertaken through a foreign branch cannot be
offset against petroleum mining income from New
will bring New Zealand’s taxation of petroleum
mining revenue into line with the practice of
a number of other countries.
changes will be included in the next taxation
bill and, once enacted, will be effective from
today. Expenditure incurred before today will
not be affected by the changes."
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