Taxation

New Zealand is generally considered to have a favourable tax environment for an investor’s earnings and assets. For example, New Zealand recently introduced the Investment Boost initiative. Investment Boost is an accelerated tax depreciation regime designed to encourage businesses to invest in productive assets. It allows businesses to deduct an immediate 20% of the value of new assets acquired (which are available for use on or after 22 May 2025) in the first year the asset is available for use in New Zealand, on top of normal depreciation for the year (based on 80% of the cost base).

New commercial and industrial buildings, which do not otherwise qualify for tax depreciation deductions, and capital improvements may also qualify. Secondhand assets that were not previously available for use in New Zealand may also attract an immediate 20% deduction. Some assets are not eligible for Investment Boost, including land, trading stock, residential buildings, and fixed-life intangible assets such as patents and some software contracts.

A New Zealand tax resident’s worldwide income is subject to tax in New Zealand. A non-New Zealand tax resident is also subject to tax in New Zealand to the extent the income has a source in New Zealand. 

Tax residency for an individual is generally based on whether the individual has a "permanent place of abode" in New Zealand or is present in New Zealand for more than 183 days in a 12-month period. Tax residency for a company is generally based on whether the company is incorporated in New Zealand, has its head office or centre of management in New Zealand, or control of the company by its directors is exercised in New Zealand.

New Zealand recently introduced an exemption from the standard 183-day rule for a person who meets the definition of a “non-resident visitor”, which may exempt certain foreign sourced services income earned while temporarily in New Zealand, subject to specific criteria.  

Currently, individual tax rates are on a graduating scale, with marginal tax rates from 10.5% (on annual income up to NZ$15,600) to 39% (on annual income over NZ$180,000). The trustee income tax rate is 39%.

Dividends are subject to income tax in New Zealand and potentially withholding tax if paid to a non-resident. New Zealand operates an imputation regime that enables New Zealand shareholders to obtain a credit for tax paid at the company level, and provides that fully imputed dividends are not subject to withholding tax.

A business is subject to income tax in New Zealand if it is a business of a New Zealand tax resident, has a sufficient physical presence here, or has New Zealand-sourced income. Relief may be available from New Zealand income tax under New Zealand’s double tax treaty network. Taxpayers must register with Inland Revenue (IR) and file an annual income tax return. Taxpayers will generally be required to pay provisional tax in three instalments over a year (calculated using a method prescribed by IR). Underpayments and late payments of tax may result in IR charging interest or late payment penalties.

Tax losses incurred by a taxpayer may be carried forward and offset against future income. 

In the case of a company, this is subject to maintaining a 49% continuity of shareholding from the income year in which the loss was incurred to the year in which it is used to offset income. There is no ability to carry back tax losses to prior income years.

For a company, if there is a breach of the 49% shareholder continuity requirement for carrying forward tax losses, it may still be possible for the company to carry forward tax losses if it satisfies the business continuity test (BCT). The BCT will generally allow tax losses to be carried forward if there is no “major change” in the nature of the company’s business activities within five years of the continuity breach, and other criteria are met. 

Whether a major change has occurred will be assessed based on factors such as:

• Assets used
• Business processes
• Use of suppliers
• Markets supplied to
• Type of product or service supplied

A tax loss of a company may be made available to another company in certain circumstances where both companies are in the same group of companies and other conditions are also met.

Businesses intending to employ people in New Zealand must register with IR.

Filing requirements depend on the number of people being employed. Employer tax obligations include KiwiSaver contributions, PAYE, and employer superannuation contribution tax (ESCT). If a business provides a benefit to an employee outside of normal salary and wages, the employer may be subject to fringe benefit tax (FBT).

Tax obligations in respect of contractors are different to those that apply in respect of employees. New Zealand taxpayers need to ensure that staff and contractors are classified appropriately (see Employment section). A non-resident visitor’s services income is excluded from the schedular payment rules, FBT, and ESCT.

New Zealand imposes resident withholding tax (RWT) on passive income paid to residents (e.g. interest and dividends) and non-resident withholding tax (NRWT) on passive income paid to non-residents (e.g. interest, dividends and royalties), subject to any applicable double tax agreement. New Zealand borrowers may be able to apply New Zealand’s approved issuer levy regime to reduce the withholding tax cost on interest paid to a third party non-resident lender.

Withholding tax is also imposed on other types of payments, including payments to non-resident contractors, entertainers and sportspeople, and New Zealand contractors within specified industries. Exemption certificates can be obtained in specified circumstances.

New Zealand imposes a goods and services tax (GST) at a rate of 15% of the value of supplies of goods and services in New Zealand (subject to certain exclusions). GST is also charged on imported goods and certain imported services, including remote services.

The majority of goods imported into New Zealand are subject to GST at 15% of their declared customs value, being the total of the value of goods, any amount of tariff duty (if any), and international transportation and insurance costs (special rules apply to low-value imported goods equal to or less than NZ $1,000).

The import GST can be recoverable via the importer’s GST return if the importer of record is GST registered and uses (or makes available to use) the goods for its taxable supplies in New Zealand. Tariff duty may apply based on the value of the item imported, at a rate that depends on the tariff classification of the item and its country of origin.

Following the OECD-led initiative, New Zealand has introduced legislation that gives effect to the global minimum effective tax rate rules (referred to as Pillar Two). New Zealand has incorporated Pillar Two by reference to the relevant OECD materials, meaning that New Zealand’s rules are intended to update as Pillar Two continues to develop at the OECD. New Zealand’s rules apply to fiscal years beginning on or after 1 January 2025. 

At a high level, large multinational groups within the scope of the rules, broadly with consolidated group revenue of €750m or more in at least two of the four preceding fiscal years, may be required to pay tax at a minimum effective tax rate of 15% on their profits in each jurisdiction. Pillar Two has implications for groups headquartered in New Zealand and for groups headquartered outside New Zealand but with a New Zealand presence.

Groups with a New Zealand presence that are within the scope of the rules must register with IR. The registration is required six months after the end of the ultimate parent entity’s first fiscal year in which the group has a New Zealand constituent entity under the applied GloBE rules.

In-scope groups may also have GloBE Information Return and annual Multinational Top-Up Tax Return obligations.

New Zealand has not introduced a Qualified Domestic Minimum Top-Up Tax, although further domestic implementation measures are being considered. The applied GloBE rules consist of an Income Inclusion Rule (IIR) including a domestic IIR (DIIR) and an Undertaxed Profits Rule (UTPR). The IIR and UTPR apply for fiscal years beginning on or after 1 January 2025. 

The DIIR, which applies to New Zealand-headquartered MNE groups only, applies for fiscal years beginning on or after 1 January 2026. The DIIR is intended to allow New Zealand to tax domestic undertaxed profits of New Zealand-headquartered MNE groups, rather than that top-up tax being collected by other jurisdictions under the GloBE rules. Depending on the circumstances, this may bring amounts into the NZ top-up tax calculation that are not otherwise subject to tax under ordinary New Zealand income tax rules.

New Zealand has a network of 41 double tax agreements with its main trading partners and is a party to the OECD’s Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (MLI). 

New Zealand has an intergovernmental agreement with the USA in relation to its FATCA regime and is a party to the OECD’s Automatic Exchange of Information initiative. New Zealand also has a number of Tax Information Exchange Agreements in force with various jurisdictions.