[ESTABLISHING A BUSINESS ENTITY IN NEW ZEALAND] 369
TAXATION In New Zealand the Government collects and administers tax through the Inland Revenue Department ("IRD"). The IRD collects tax under two primary pieces of legislation. They are: 1. The Income Tax Act 2007; and 2. The Goods and Services Tax Act 1985. The latter is a consumption tax commonly called "GST", charged at a flat rate of 15%. In addition, import tariffs, miscellaneous excise duties and rates are collected. Some of the important features of the New Zealand tax system and policy environment are that: 1. There is generally no capital gains tax (however what is effectively a capital gains tax can apply to some foreign debt, financial arrangements and property investments); 2. There is no employee payroll tax; 3. There is no social security tax; 4. New Zealand is a party to numerous double agreements – currently 40; and 5. Personal tax rates vary, depending on income; 6. A New Zealand resident company is taxable on its worldwide income at a flat rate of 28%; 7. All companies, whether resident or non- resident, are taxed at the same rate (however it should be noted that an overseas company is taxed at the same rate but only in respect of its income that has a New Zealand source) FINANCIAL SERVICE PROVIDERS (FSP) Any New Zealand entity or person in the business of providing ‘financial services’ (in NZ
or overseas) must register as a Financial Service Provider (FSP) on the Financial Service Providers Register (FSPR). Financial services What qualifies as a ‘financial service’ is vast and is defined in the Financial Service Providers (Registration and Dispute Resolution) Act 2008. Financial services include: 1. Financial advisors, 2. Brokering; 3. Providing credit under a credit contract; 4. Issuer or offeror of financial products; 5. Changing foreign currency; 6. Trading financial products or foreign exchange on behalf of other persons. Registration process The FSPR is a branch of the Companies Office. Registration as an FSP is an online process. It is somewhat more involved and sometimes lengthy than the process for registering a company or limited partnership. Points to note are that: 1. Once your business entity is incorporated/established, you can then apply for FSP registration. 2. The complexity of the registration process (and what is required) varies depending on the relevant financial service(s), in most cases however: a. It will be mandatory for the FSP to join an approved dispute resolution scheme; and b. The entity will be expected to be
aware of and agree to comply with New Zealand’s anti -money laundering and countering
ILN Corporate Group – Establishing a Business Entity Series
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