Foreign Investment Funds Paper Released

March 19, 2010 International TaxationNew Zealand Taxation

BeehiveThe New Zealand Government has released an issues paper seeking feedback on possible changes to be made to the tax treatment of non-portfolio foreign investment funds.

At the International Fiscal Association conference held in Christchurch on March 19th Peter Dunne, New Zealand Revenue Minister, released an issues paper on the tax treatment of New Zealand companies with offshore subsidiaries. The paper aims to build upon reforms carried out last year in an effort to allow national companies to compete in foreign markets without major tax hindrance. Particularly the issues paper seeks feedback on how tax exemptions could be extended to investments made by New Zealand companies into foreign entities in which they are not a controlling partner, commonly called a foreign investment fund.

According to the minister’s speech, New Zealand companies wishing to expand overseas often make a sizeable investment into a foreign partner or creating a jointly owned entity. Encouragement and fostering of such activity has the potential of bringing significant economic benefits to New Zealand. It could also endow New Zealand firms with improved market knowledge, access to customers and suppliers, while facilitating higher levels of growth and high-value research.

Commenting on the potential changes, Peter Dunne said, “…it is important that the tax system does not act as a barrier to New Zealand companies looking for opportunities to expand into new and emerging markets…. so that New Zealand firms can reap the commercial advantages of global investment more easily.”

Photo by Ewan-M