PIE Rules to Change for Foreign Investors
April 6, 2011 New Zealand Taxation
New Zealand is looking set to welcome new foreign investors, as the government changes the tax treatment of non-residents investing in New Zealand Portfolio Managed Entities, bringing the country one step closer to becoming to becoming an international financial service hub.
In December 2009 the government’s Capital Market Development Task Force released its final report, in which it was suggested that the country should pursue the roll of a high-value exporter of back- and middle-office financial services for the international fund management industry. The prospect was reiterated on February 10th 2010 by John Key, in a speech during which he revealed his aim to turn the country into an international financial service hub. Now the government is taking steps to make these intentions a reality, by altering the tax treatment of foreign investors using Portfolio Investment Entity (PIE) structures.
In a media statement made on April 5th the Revenue Minister Peter Dunne revealed that a new Bill has been released which will remove the over-taxation of foreign investors. Under current rules, non-residents making investments into a PIE will be faced with a 28 percent tax rate on all earned incomes, regardless of whether they were sourced in New Zealand or abroad. The minister explained that the rules were barriers of entry for foreign investors. The new bill will change the applicable taxation rules, aligning the tax obligations faced by overseas investors using PIEs and those investing directly.
The changes outlined in the Bill are scheduled to be enacted later this year.
Photo by artemuestra