If you establish a business in New Zealand, is your entity taxable? As an overseas company, entity or non-resident considering setting up a business in New Zealand, you can source highly skilled advice and assistance from KPMG.
Our services can save you valuable time and significantly contribute to your business success in New Zealand. Read on to find out more about establishing a presence in New Zealand, or if you have specific questions or need detailed advice, please contact us on 0800 224 254.
Overview of establishing a business in New Zealand
In brief, the profits of a business are taxable in New Zealand if that business is carried on in New Zealand.
However, a business operated by a non-resident may be subject to tax relief. This would occur due to the existence of a double tax agreement if it is resident in a country with which New Zealand has such an agreement and if the business does not have sufficient presence in, or connection with, New Zealand to be treated as taxable here under that agreement. The necessary presence to be taxable in New Zealand is referred to in those agreements as a permanent establishment or PE.
Typical steps to establishing a taxable business in New Zealand
A common progression of events, when a business is being established in New Zealand, is for the business to gain closer ties to New Zealand over time. Initially, the business might be trading with people in New Zealand, but without a presence here. It might then establish a representative here to understand the market opportunities, provide information about the business and generate leads. As a market is identified and developed, the business might establish a local sales force, then eventually a branch or a subsidiary.
Each of these stages has a different tax profile and obligations. The critical stage is the point at which the business ceases to trade with New Zealand, and starts to trade in New Zealand.
The issue is similar for a business operating in New Zealand for a specific contract. The primary issue for contractors and one-off projects is whether the project is sufficient to create a permanent establishment and be taxable in New Zealand. If the contract income will be taxable in New Zealand, the question becomes the extent to which the profits from the contract are properly attributable to the parts of the contract performed in New Zealand.
Click on the links below to learn more about income taxes in New Zealand.
Contact us for assistance on 0800 224 254 or to ask a question regarding establishing a business in New Zealand. We look forward to being of assistance.