INTRODUCTION
New Zealand is a country located in the southwestern Pacific Ocean. It is compromised of two main islands – North Island and South Island. Because of its highly reputable business environment and the presence of leading international legal and accounting firms, New Zealand continues to attract international professionals and estate planners to set up companies and foreign trusts in New Zealand. New Zealand is now widely accepted as a significant centre for international asset and estate planning.
LAW AND TAXATION New Zealand is a member of the Commonwealth and its law is based on British Common Law with locally enacted statutes. It has longstanding tax legislation allowing the use of New Zealand Foreign Trusts that makes it an attractive and ideal jurisdiction for asset protection planning.
New Zealand has double taxation treaties with major trading nations, including Australia, Canada, China, France, Germany, India, Indonesia, Ireland, Italy, Japan, Netherlands, Norway, Russia, Singapore, South Africa, Sweden, Switzerland, Taiwan, UAE, and USA.
ADVANTAGES OF NEW ZEALAND - A member of British Commonwealth countries.
- Stable political and economic environments.
- Legal system is based on English common law.
- Favorable trust legislation – foreign trusts are recognized.
- High Legal, Banking, and Accounting standards.
- Highly developed business friendly environments and infrastructures.
- A member of Organization for Economic Co-Cooperation and Development (OECD).
- Not a traditional offshore jurisdiction but when structuring is performed correctly, has similar protection to other common offshore jurisdictions.
- Various tax treaties with other countries, including China. Recently signed a free trade agreement with China.
- No foreign exchange control.
TYPE OF COMPANY RECOMMENDED AND KEY FEATURES
The relevant company for trust structuring is that of a SPC or special purpose company. If structured correctly with regard to their home jurisdiction’s taxation laws, a SPC can be used by a client to gain tax-exempt status in a similar but not identical way to a traditional offshore jurisdiction.
New Zealand Special Purpose Company (“SPC”)
- Usage is when structured as the trustee of a New Zealand Foreign Trust.
- Great flexibility in incorporation and management process as the SPC has no capital requirement and a fast incorporation procedure.
- Note – if 25% or more of the shares are held by shareholders who reside overseas, the SPC is required to file annual financial accounts.
- The SPC is free to do business and invest anywhere other than in New Zealand.
- Any New Zealand income will be taxed in New Zealand ie. bank interest.
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