New Zealand: Business Environment

Company Tax

28%

Tax Rate For Foreign Companies

New Zealand resident companies are taxed on their worldwide income, and non-resident companies (including branches) are taxed on their New Zealand-sourced income.
A company is deemed to be resident in the country if its place of incorporation, location of head office, centre of management, or directors exercising control of the company are in New Zealand.

A non-resident contractor’s tax (NRCT) applies to contract payments to non-residents in relation to certain contract activities undertaken in New Zealand, at a rate of 15% (or 45% for individuals and 20% for companies if the relevant documents are not provided).

Capital Gains Taxation

Capital gains are generally not taxed in New Zealand. Certain property transactions are taxable, such as the sale of residential property within five years of purchase (with an exception for a family home), as well as the sale of personal property purchased with the intention of resale.

Main Allowable Deductions and Tax Credits

Expenses incurred for the purpose of generating income are generally deductible. On the other hand, start-up costs and goodwill are not deductible for tax purposes.

Interest charges and bad debts (for the year in which non-recoverable debts are eliminated) are tax-deductible. Donations to charities approved by the New Zealand tax authorities are eligible for a tax deduction, capped at the net income of the company in a given tax year. Legal fees are deductible if they are paid in order to generate taxable income or to carry on an activity whose objective is to generate taxable income. These fees are not deductible when they are of a capital nature. Entertainment expenses are deductible up to 50% (100% for costs incurred abroad). The benefits tax is also tax-deductible, as well as R&D expenses.

Tax losses can be carried forward as long as the company maintains a minimum of 49% participation on a continuous basis. The carryback of losses is prohibited; however, following the COVID-19 pandemic, a temporary loss carryback is available for businesses that have incurred a loss in the 2019-20 income tax year or that anticipate being in a loss position in the 2020-21 income tax year.

Other Corporate Taxes

The New Zealand tax system does not impose any stamp or capital duty while the levy of property tax is made at variable rates depending on the region. In contrast, all employers are required to pay a fringe benefits tax at a rate between 49.25% and 63.93%.
The Tax Code does not explicitly provide for a social security tax (the latter being financed by all taxes), yet employers are required to contribute when the employee decides to register to the voluntary savings scheme (KiwiSaver, rates between 10.5% and 39% according to the salary). All new employees are automatically enrolled in the KiwiSaver and employers are required to offer the scheme to all staff. Furthermore, a statutory-based scheme of accident insurance is funded in part by premiums paid by employers and employees at rates that vary according to the industry or risk classification of the employer and the level of earnings of employees.
When making contract payments to non-residents in relation to certain contract activities undertaken in New Zealand, companies should deduct the Non-resident contractor’s tax (NRCT), at a rate of 15% (20% if the relevant paperwork is not provided). Certain transactions are exempted, for example for payments for contract work amounting to less than NZD 15,000 in a 12-month period, when the non-resident has full relief from tax under a DTA or is present in New Zealand for less than 92 days in 12 months.

Other Domestic Resources

New Zealand Inland Revenue

Consult the Doing Business Website, to obtain a summary of the taxes and mandatory contributions.

Tax Rate

Allowable Deductions and Tax Credits

Generally, deductions are not allowed against employment income. Taxpayers with low household income may be allowed family support allowances. Tax credits are offered for certain charitable donations and accident insurance premiums. Individuals with annual income between NZD 24,000 and 48,000 and who meet certain requirements are entitled to an "independent earner" tax credit of NZD 520.
Deductions are available for expenditure incurred in deriving gross income or in carrying on a business.
For more details go on the IRD website.

Special Expatriate Tax Regime

A resident of New Zealand is subject to tax on worldwide income, whereas a non-resident is subject to tax only on income from sources in New Zealand.
Residence is determined either by "permanent place of abode" (regardless of how long a person has been outside of New Zealand) or physical presence in the country for 183 days in any 12-month period.

For further details consult the IRD website.