New Zealand is well known to most readers and requires little introduction. It is a safe, stable and secure country which offers considerable benefits to those involved in international tax planning.
New Zealand lies in the South Pacific Ocean and consists of two large islands and a number of smaller islands. Granted autonomy in 1947, New Zealand has a progressive economy that is based largely upon banking and finance. It has undergone substantial structural reform since 1984 and as a result has experienced economic liberalisation. There have been several reforms, such as the removal of interest and exchange controls allowing the free flow of capital in and out of the country. The government has implemented various changes to encourage greater investment in New Zealand. With the overall tax incentives highlighting the positive attitude of the government to place New Zealand amongst the best international financial centres.
With the increased use of New Zealand as a trust domicile there has been a corresponding rise in interest in New Zealand companies. These Key Facts provide an overview of the New Zealand corporate regime, the tax treatment of New Zealand companies with non-resident Shareholders earning non-New Zealand source income, and our fees for providing a range of corporate services.
A company resident in New Zealand is assessable on worldwide income whether derived from New Zealand or elsewhere, subject to the provisions of the Income Tax Act, 1994. A company not resident in New Zealand is liable only in respect of income derived from New Zealand.
A company is resident in New Zealand if any one of the following four tests is satisfied:
It is incorporated in New Zealand.
Its Directors exercise control in New Zealand.
It has its centre of management in New Zealand – the place from where the company as a whole is managed on a regular basis.
It has its head office in New Zealand – the office from which the business of the company is directed and carried out.
All companies operating in New Zealand whether they are resident, non-resident or a branch of a non-resident company are taxed at the flat rate of 28% on their annual taxable profit.
An overseas company may commence business in New Zealand as a “branch operation” and will be taxed at the flat rate of 28%.
New Zealand’s network of tax treaties can be used in international tax planning.
New Zealand is unrivalled in its security, possessing both internal political and regional stability. In a troubled world it does not present itself as a terrorist target.
The reason for this is that if more than 25% of the shares, or a majority of Directors are resident outside New Zealand then the company has to produce annual audited accounts that are filed with the company annual return – client’s option and decision.
A Company that is formed and registered in New Zealand under the New Zealand Companies Act 1993 (NZ Company) as well as a body corporate that is incorporated and registered outside New Zealand but is carrying on business in New Zealand (Overseas Company) are required to file an “Annual Return” in a designated month and pay the required annual filing fee.
A Company is not required to file an Annual Return in the calendar year of its incorporation. Companies can apply to the Registrar to vary the month in which they file their Annual Return. A “Shuttle Annual Return” is sent by the Registrar to the company’s address for communication, or its registered office one month before the return is due to be filed, or there is also the option to file the Annual Return on-line with the Companies Office.
The information within the shuttle Annual Return is obtained from the New Zealand Companies Office database. The process of requiring an Annual Return is an important way of verifying the information contained in this database. Where the information on a shuttle Annual Return needs to be updated, follow the instructions on the form. Date of Annual Return. The Annual Return is completed upon this date. It must be a day in the month the return is due. All information must be correct as at this date.
It is usual for a trust to be created by the execution of a formal written deed. Following execution of the trust deed a trust will come into existence upon settlement of the initial property.
SC & Associates is able to assist with preparation of all of the appropriate documentation and provide the following services:
Initial advice and liaison with professional advisers;
Drafting the trust deed and letters of wishes (or deed of retirement and appointment of trustees, as the case may be);
Formation of underlying companies to hold trust assets;
Preparing and reviewing documentation relating to commercial transactions;
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