Lowtax Network

Back To Top

Your Lowtax Account

Cook Islands Approves 2014 Budget

by Mary Swire, Lowtax.net, Hong Kong
19 December, 2013

The Cook Islands parliament has approved the 2014 Budget, which includes a number of tax changes to be introduced progressively over the period from January 1 and April 1, 2014.

From January 1, the annual income tax free threshold will increase for wage earners from NZD10,000 (USD8,260) to NZD11,000; the tax on annual earnings from NZD11,001 and NZD30,000 will reduce from 25 percent to 18.5 percent; a new tax bracket will be introduced between NZD30,001 and NZD80,000 of 27.5 percent, as opposed to 30 percent, and the highest 30 percent marginal rate will apply over NZD80,000.

The Minister of Finance Mark Brown commented that the individual income tax restructuring was particularly aimed at helping low income earners, and that "the last time taxation rates were modified was over ten years ago, back in 2003 when the threshold was increased from NZD6,000 to NZD10,000."

"The largest relative decrease in taxation," he added, "will go to those people who earn up to NZD30,000 per annum. They will now receive almost NZD1,500 extra a year in their hand from January 1, 2014, that is a 6 percent increase in their take home wage."

Other changes not related to the income tax changes which will commence from January 1, 2014 are an increase in the personal duty allowance for people entering the Cook Islands from NZD250 to NZD750; an abolition of the 15 percent withholding tax on bank interest, which will then be included as personal income; and a cessation of differential rates of taxation on trust income, which all will be taxed at 30 percent.

In addition, the secondary tax rate will cease, and the Minister warned employees with two jobs of the need to ensure that their second job is being taxed at their correct tax rate.

The next phase of changes will see the Government introduce legislation next February which will put into effect a series of welfare reforms which will increase pensions by 25 percent and other welfare payments by 10 percent from March 1, 2014, but all such payments (except for child allowance) will become subject to tax from January 1.

"All those pensioners below the tax-free threshold will receive the full 25 percent increase in their payment. For those over 70 with no other income, that means that they will now receive NZD7,500 – the full NZD1,500 increase – and continue to pay no tax."

In the legislation, the Government will also reform the current import levy arrangements and increase the value added tax rate from 12.5 percent to 15 percent from April 1, 2014. Import levies on pork products, sea freighted eggs, ice cream and seasonal vegetables will be reduced to zero, while import levies on tobacco, soft drinks and alcohol will be eliminated and replaced with an excise regime on products, regardless of source.


See all of today's news


 

News Archive

Event Listings

Listings for the leading worldwide conferences and events in accounting, investment, banking and finance, transfer pricing, corporate taxation and more...
See Event Listings »