Doing business in New Zealand
- How quickly can I set up a business?
- What is the minimum investment needed?
- How can I raise finance?
- What are the legal requirements for setting up my business?
- What structure should I consider?
- What advice can you give me in regards to payroll and taxation requirements?
- Is there anything else that I should know?
How quickly can I set up a business?
A company can be set up in NZ within an afternoon.
However, it can take longer to get the company registered with the NZ tax department and a requirement is that you have a bank account established. The setting up of a NZ bank account will take a few weeks. We also have extensive anti-money laundering legislation in NZ and ensuring all documentation has been correctly supplied can be time consuming.
What is the minimum investment needed?
A company can be set up with $1 capital. We do not recommend this, and company capital should be set under advisement.
Tax advice is also necessary to avoid double taxation. There are also a number of tax rules pertaining to thin capitalisation and repatriating profits back overseas.
How can I raise finance?
Private companies cannot raise funds from the public – only publicly listed companies. For private companies, finance can be raised through a bank and there are also secondary financial institutions that will lend on specific assets.
Finance will mostly need to be secured on tangible assets.
What are the legal requirements for setting up my business?
A company is the most common form of structure for owning a business because it affords the shareholders limited liability.
Other structures used are limited liability partnerships, trusts, sole traders and ordinary partnerships.
What structure should I consider?
For existing overseas companies wanting to trade in NZ, the starting point is operating as a branch in NZ. This will depend on any double tax treaty as well as the level of set up in NZ. At this level the branch needs to be registered for GST in NZ and prepare yearly accounts and pay NZ tax on any profits.
Most countries allow tax paid in NZ to be claimed in the country of origin under a branch arrangement.
Overseas companies can set up a NZ subsidiary where they wish to fully operate in NZ. An important factor in setting up in this way will be whether profits made in NZ will be subject to double taxation – once in NZ and again in the holding companies’ country. For this reason, we have set up a number of limited partnerships in NZ. This allows for the investors to have limited liability with profits being disbursed before tax. If these profits are then subject to tax in NZ it is withholding tax which usually can be claimed offshore.
What advice can you give me in regards to payroll and taxation requirements?
We provide a full range of services and give advice on all that is necessary to set up a business in NZ. Auckland is the largest city in NZ and is the biggest business hub in the country.
The standard Balance date in NZ is 31st March and the company tax rate is 28c. Dividends must be distributed at 33c.
A 15% goods and services tax is imposed in NZ. There are very few exemptions from GST. GST is not a cost to business in NZ – only to the final user of the goods and services. GST is reported on a monthly two monthly or six-monthly basis and can be calculated on either cash or accrual methods.
Payroll and HR matters:
All employees in NZ must sign an employment contract before they commence work. They are subject to PAYE that is deducted at source by the employer. The employer must report deductions to the IRD on a weekly basis and payment is 20th of the month following deduction. There is a national superannuation scheme which the employee elects to join but it is not compulsory. If the employee joins the employer’s superannuation share is 3%. Employers generally work 40 hours per week and are entitled to 4 weeks holiday per year. They are also entitled to 12 days statutory holidays and 10 days sick leave per year.
A fringe benefit tax is also levied in NZ. This is levied on all employers that supply fringe benefits to their employees. Those benefits include vehicles, entertainment, loans, accommodation etc.
Is there anything else that I should know?
NZ is a trading nation with its most significant exports being in the agriculture sector. However, over the years the range of goods exported has expanded to many new areas, but we have worldwide recognition in horticulture products such as kiwifruit, wine, avocados, and fruit.
Also, in the last few years NZ has fast become known as a testing ground in the world for start-up products and services. These companies are then expanded or sold once the market and product, or service is proven. NZ is generally seen as an easy place to set up in business and an ideal steppingstone for expansion into the Asia/pacific regions. As a trading nation we have a range of free trade agreements in place that operate worldwide.
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