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Taxation in New Zealand

Taxation in New Zealand

Updated on Thursday 17th January 2019

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Taxation-in-New-ZealandOne of the main points of interest of people moving to a foreign country is the taxation system. No matter if one comes to New Zealand for starting a business or for work, getting acquainted with the taxation system is mandatory.

Taxation in New Zealand implies levying the income tax on the income earned by individuals and companies. While the first category of taxpayers will be imposed with the personal income tax, companies will be imposed with the corporate tax. There are also other taxes which need to be paid and our lawyers in New Zealand can offer more information about them. They can also help foreign investors interested in setting up companies in New Zealand.

What are the main taxes in New Zealand?

The New Zealand taxation system is made up of direct and indirect taxes. The direct taxes are represented by the income tax which applies to individuals and companies and indirect taxes, among which the Goods and Services Tax – GST – is the best known.

It should be noted that the taxation system in New Zealand provides for individuals and companies to be taxed on their worldwide income (if they are residents) or on the income earned in New Zealand (if they undertake any type of activity on a temporary basis).

Our New Zealand lawyers can explain how the tax resident status can be obtained in this country.

The personal income tax in New Zealand

As mentioned above, the personal income tax is applied to individuals residing in New Zealand. In order to pay the personal income tax, an individual must be a tax resident here. While New Zealand citizens will acquire the taxpayer status automatically, foreign citizens must be residents of this country and thus be registered for taxation here in order to pay their taxes in New Zealand. This status can be obtained through a work contract or by starting a business, however, foreign citizens can also relocate here for other purposes and become New Zealand taxpayers.

Individuals will be levied the personal income tax on the following sources:

  • -          earnings derived from salary or other types of wages paid by a local company;
  • -          earnings derived from owning shares in a local or foreign company;
  • -          earning from money generated by investment funds or pension funds;
  • -          earnings derived from owning and renting a property located in New Zealand;
  • -          earnings from other sources, such as offshore companies and bank accounts.

 

The personal income tax is applied at progressive rates ranging from 10.5% to 33%, as it follows:

  • -          for an annual income of maximum 14,000 NZD, the 10.5% rate applies;
  • -          for an annual income between 14,001 and 48,000 NZD, the 17,5% rate applies;
  • -          for an annual income between 48,001 and 70,000 NZD, the 30% rate applies;
  • -          for an annual income of more than 70,000 NZD, the 33% rate applies.

 

Our law firm in New Zealand can advise foreign citizens interested in relocating to this country.

The corporate tax in New Zealand

The New Zealand tax system provides for companies to register with the Inland Revenue in order to be considered tax residents in this country. Under the same taxation system, a company will be imposed the income tax on the business profits earned on a worldwide basis or sourced in New Zealand.

Compared to the personal income tax, the corporate tax is applied at a flat rate of 28% no matter if the income is generated at a global or local level.

Foreign companies will benefit from the same taxation system imposed on New Zealand companies provided that they have a place of management here. Apart from this, they will also benefit from the double taxation agreements signed by New Zealand.

You can rely on our New Zealand law firm for full information on the tax legislation applied to companies operating in this country.

Tax advantages offered by New Zealand

Even is the New Zealand taxation system seems to impose higher rates than other states, it should be noted that it comes with several advantages, among which:

  • -          there are no taxes imposed on inheriting goods in New Zealand;
  • -          the capital gains tax is imposed on certain incomes only, such as specific investments;
  • -          employers are not required to pay any social security or payroll taxes;
  • -          dividends benefit from a full imputation system which implies the tax to be levied on the shareholders and not on the company;
  • -          there is no wealth or net worth tax imposed in New Zealand.
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Apart from these, the Goods and Services Tax in New Zealand is levied at a standard rate of 15%, however, there are also goods which are applied a 0% tax rate or are exempt from this levy.

For full information on taxation in New Zealand, please feel free to contact us. We can also help if you are interested in opening a company in New Zealand.