New Zealand is a country with a thriving economy that consistently ranks as one of the top jurisdictions in the world for ease of doing business. Its remote location has become less important in a global economy that is increasingly interconnected. Flexible political boundaries mean that both large corporates and small companies can tap into the global market through continuously improving communications and logistics capabilities.
The key to business success in New Zealand is to understand the unique challenges that companies must overcome to operate efficiently.
Business setup and incentives
New Zealand ranks as one of the easiest countries in which to set up a business. This combined with a stable business environment makes it attractive to foreign investors. New companies are required to apply for registration online with the NZ Companies Office as well as for IRD (Inland Revenue) and GST (goods and services tax) registration. At least one director must be a resident of New Zealand. An exception is when the director is a resident of Australia, however they should then also be a director of at least one Australian company.
New Zealand (Aotearoa) is a member of Organisation for Economic Cooperation and Development (OECD) and has multiple free trade agreements (FTAs) that allow it to offer key business incentives.
FTA partners include Australia, China, EU, UK, Hong Kong, Singapore and Malaysia, among others. Goods imported from these countries are eligible for reduced import duties or exemption from duties.
Tax environment
New Zealand has broad income and consumption tax regulations, including withholding taxes on many cross-border payments. Certain taxes such as capital gains, gift tax and stamp duties are not applicable.
These are the current tax rates:
- GST (goods and services tax): 15%
- CIT (corporate income tax): 28%
Culture and the Treaty of Waitangi
There are notable differences between Māori and NZ European (Pakeha) societies that businesses should be mindful of. Māori are the indigenous Polynesian people of New Zealand, called Aotearoa in the Māori language.
In the last decade, there has been a significant increase in the number of migrants, which has had a positive impact on the overall growth of the economy.
New Zealand does not have a written constitution, but the Treaty of Waitangi is part of the foundational law and is recognised in several statutes, court decisions and common law principles in the country.
Anti-money laundering obligations
The Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act) places obligations on New Zealand's financial institutions and casinos to detect and deter money laundering and terrorism financing.
The following agencies supervise the AML/CFT Act and the businesses (known as reporting entities) they monitor:
- the Reserve Bank of New Zealand (RBNZ): supervises banks, life insurers and non-bank deposit takers
- the Financial Markets Authority (FMA): supervises issuers of securities, licensed supervisors, fund managers, brokers and custodians, financial advisers, derivatives issuers, DIMS providers and peer to peer lending and equity crowd funding service providers
- the Department of Internal Affairs: supervises casinos, non-deposit taking lenders, money changers, money remitters, payroll remitters, debt collectors, factors, financial lessors, safe deposit box vaults, non-bank credit card providers, stored value card providers and cash transporters and any other reporting entities not supervised by the RBNZ or FMA.
Data control
The Privacy Act 2020 that outlines the requirements for the collection, use, storage and disclosure of "personal information" has recently been updated in line with global requirements. Companies must follow its regulations related to data protection and data breaches. The Act is applicable to companies and public agencies that are residents of New Zealand.
Company structures
Limited Liability Companies (LLCs) are the most popular type of local company in New Zealand. Global companies looking to expand into the country can either set up a subsidiary or a branch office. A subsidiary is an independent legal entity that is owned by the parent company but is registered according to local business regulations and can execute its own activities. A branch office is entirely owned and operated by the parent company and conducts the same activities.
Social governance
New Zealand does not have a mandatory social security programme. Employers, employees and self-employed individuals are required to contribute towards the mandatory no-fault personal injury cover – the Accident Compensation Corporation (ACC) scheme – which covers all accidents at home and at work for New Zealand citizens, residents and visitors to the country.
Employment in New Zealand is governed by several pieces of legislation including the Employment Relations Act 2000, the Holidays Act 2003, the Minimum Wage Act 1983, the Health and Safety at Work Act 2015 and the Parental Leave and Employment Protection Act 1987.
Foreign nationals (excluding Australian citizens) are required to hold a valid work visa.
TMF Group is here to help
TMF Group's local experts have extensive experience in helping global companies expand into New Zealand. Whether you're looking to enter the country or extend your existing operations, we'll ensure a smooth journey through all aspects of entity registration and management, accounting and tax and HR and payroll.
Get in touch with TMF New Zealand to discuss how we can help you take your business to the next stage.
Find out more about doing business in New Zealand
Request the New Zealand country profile for an in-depth guide to operating in the jurisdiction.
Each country profile has been curated by our inhouse TMF Group experts, on the ground in each location, to provide you with a summary of critical policies and regulations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
