New Zealand

General Business Information

Over the past 20 years the government has transformed New Zealand from an agrarian economy dependent on concessionary British market access to a more industrialized, free market economy that can compete globally. This dynamic growth has boosted real incomes – but left behind some at the bottom of the ladder – and broadened and deepened the technological capabilities of the industrial sector. Per capita income rose for ten consecutive years until 2007 in purchasing power parity terms, but fell in 2008-09. Debt-driven consumer spending drove robust growth in the first half of the decade, helping fuel a large balance of payments deficit that posed a challenge for economic managers. Inflationary pressures caused the central bank to raise its key rate steadily from January 2004 until it was among the highest in the OECD in 2007-08; international capital inflows attracted to the high rates further strengthened the currency and housing market, however, aggravating the current account deficit. The economy fell into recession before the start of the global financial crisis and contracted for five consecutive quarters in 2008-09. In line with global peers, the central bank cut interest rates aggressively and the government developed fiscal stimulus measures. The economy pulled out of recession late in 2009, and achieved 2-3% per year growth in 2010-13. Nevertheless, key trade sectors remain vulnerable to weak external demand. The government plans to raise productivity growth and develop infrastructure, while reining in government spending. [Source: CIA World Factbook]

New Zealand offers the ease of an English-speaking culture, a stable democracy, rule of law, a transparent market, and business practices similar to those in the United States.

The foundation of New Zealand’s economy is exporting agricultural products such as dairy products, meat, forest products, fruit and vegetables, and wine. Global economic and financial uncertainty amongst New Zealand’s trading partners, forecasts slow growth in 2012. High international commodity prices, particularly for protein will help New Zealand face any further market volatility. Domestically, the economy anticipates growth in the building and construction sector as the Christchurch rebuild, earthquake strengthening and remedial work on leaky homes raises the prospect of the largest construction-led boom in New Zealand history.
Opportunities exist for American technologies and products that reduce cost, increase productivity, and wring more value from supply chains. In addition, a continuous drive to remain globally-competitive with a relatively-small manufacturing sector should drive prospects for productivity-enhancing products such as information technology and manufactured goods. [Source: US Embassy in New Zealand]

Fast Facts

[Source: World Bank, Wikipedia, CIA World Factbook]

Establishing a Business

Businesses commonly use one of three business structures:

• Sole trader
• Partnership
• Company

If you’re a sole trader, you’re in complete control of your business. The profits are entirely yours, but so are all the responsibilities and liabilities – including any debts your business incurs. Becoming a sole trader doesn’t require any legal paperwork, which is why many businesses in New Zealand start off as sole traders.

If you’re in a partnership you’ve chosen to pool your assets with others into one business, with the profits and losses of the business divided between you. These types of businesses are established with partnership agreements, which set out in writing the division of profits and losses.
A company is a business that is a legal entity in its own right, separate from its shareholders. This is important because the company owns all its assets and liabilities, which means your responsibilities for any debts are generally limited to the amount you’ve invested as share capital in the business.

Registering a Business

Every company in New Zealand has to be incorporated – or registered – with the Companies Office (the national registrar of companies).

Sole traders and partnerships

If you’re carrying on business as a sole trader you should return your business income under your personal IRD number. Partnerships must have their own IRD number. If you haven’t got a personal IRD number, you need to apply for one by filling out an IRD number application – individual (IR595) or an IR595A for a partnership.

Companies

If your business will be run through a company, you need to get an IRD number for it. However, rather than going through Inland Revenue, you can do this through the Companies Office when you register your company for incorporation.

• For GST (Goods & Services Tax).

Businesses must become registered for GST once they reach (or expect to reach in the next 12 months) an annual turnover of more than $60,000. Once registered, you collect GST for the government on the goods and services you sell and can claim GST back on the goods and services you buy for your business. If your turnover is under $60,000 you may choose to register voluntarily.

• To become an employer.

When you start employing staff, you must register as an employer with Inland Revenue. You’ll also be asked whether you need to register for Fringe Benefit Tax (FBT) and the Employer Superannuation Contribution Tax (ESCT). Find out more with Business tax and levies. Don’t register as an employer if you only hire contractors. [Source: business.govt.nz] Special Purpose Company

A special purpose company is one of two separate entities functioning together to provide exemption from taxation of either income or capital gains . . . as long as the settler remains a non-resident.

In this case, an offshore trust’s trustees exercise discretion over assets held in trust. The special purpose company acts as the resident trustee for the foreign trust. . If the special purpose company does no business of its own and acts only in its capacity as a corporate trustee for the foreign trust, then that company will not need to register or file returns with New Zealand’s Inland Revenue.

American Corporate Services offers experience and expertise for astute investors who wish to establish offshore businesses. Whether an investor wishes to immigrate or simply to establish a business entity, our network of professionals has the ability to advise, assist, direct and enable clients to understand and navigate the process for New Zealand company formation.

Our services include everything you need for starting a new business in New Zealand. In addition to helping to establish a New Zealand business bank account, helping you set up your business to conform to New Zealand accounting standards and to comply with New Zealand taxes, we also offer boutique amenities such as New Zealand secretarial services. We can even help you to create a New Zealand virtual office that will appear to others as though you are actually in New Zealand, even though you may be just about anywhere else on the globe at the time. Our business is making your investment a success.