Edition No. 1 March 2019 Doing Business Guide New Zealand This guide has been produced by the Morison KSi New Zealand member About This firm for the benefit of their clients and associate offices worldwide who are Guide interested in doing business in New Zealand. Its main purpose is to provide a broad overview of the various things that should be considered by organisations when setting up business in New Zealand. The information provided cannot be exhaustive and – as underlying legislation and regulations are subject to frequent changes – we recommend anyone considering doing business in New Zealand or looking to the area as an opportunity for expansion should seek professional advice before making any business or investment decision. While every effort has been made to ensure the accuracy of the information contained in this guide, no responsibility is accepted for its accuracy or completeness. The information in this guide is up to date as at the edition date. For more information, please contact: Hayes Knight www.hayesknight.co.nz Business Advisory Taxation Tristan Dean Phil Barlow Business Advisory Director Tax Director E: [email protected] E: [email protected] T: +64 9 448 3231 T: +64 9 448 3233 Hayes Knight office locations Level 1 Level 2 5 William Laurie Place 31-33 Great South Road Albany Newmarket Auckland 0632 Auckland 1051 T: +64 9 414 5444 F: +64 9 414 5001 While every effort has been made to ensure the accuracy of the information contained in this booklet, no responsibility is accepted for its accuracy or completeness. www.morisonksi.com Edition No. 1 March 2019 Contents Introduction 1 Business Structures 3 Labour and Personnel 6 International Mobility 9 Taxation System 11 Banking and Finance 14 Reporting Requirements 17 Agencies Providing Assistance 20 Grants and Incentives 22 Why New Zealand? by population and geographic area Introduction is Auckland. The dominant cultural Given its stable and globally groups are of European, Maori and competitive economy, and efficient Asian descent. Other smaller groups tax regime, New Zealand is a highly include Pacific Islanders and many attractive country to do business in. other ethnicities, which has resulted in an ethnically diverse population. In recent surveys, New Zealand has consistently ranked as one of the English is the everyday language best countries to do business in. spoken in New Zealand; Maori is the New Zealand is recognised as the other official language. most business-friendly environment in the world: the Doing Business Political system 20191 report by the World Bank ranks New Zealand 1st out of 190 New Zealand is an independent countries for the best place in the member of the British world to do business. It is also Commonwealth. Queen Elizabeth ranked as the easiest place in the II is the Head of State, her world to start a business. representative in New Zealand being the Governor General. New Zealand’s location is a great base for doing business in the Asia Parliament is the governing body of Pacific region and globally. It has New Zealand. Parliament is composed many free trade agreements in place of a single legislative chamber with major economies around the consisting of the House of world, along with closer economic Representatives, which generally has partnerships and economic co- 120 members. The House is elected operation agreements. New for a maximum 3-year term using a Zealand has excellent transport and mixed member proportional (MMP) distribution links. system. MMP is a form of proportional representation where voters each New Zealand is well known for cast a party vote to choose the being a friendly place and given its political party, and an electorate climate, beautiful landscape and vote to choose which individual great living conditions, is a fantastic from their electorate they want to place to live and prosper. be their Member of Parliament. It is a country that is very Education, social welfare services, welcoming of investors. police, and fire control are under the control of the central government. Geography Territorial councils administer local and community services such as New Zealand is situated in the water supply and rubbish collection. South Pacific Ocean, 1,600 km southeast of Australia. The country Legal system consists of two large islands, the North Island (115,000 km2) and The New Zealand legal system South Island (151,000 km2), together is based on the English common with a number of smaller islands, law system. The judicial system some close to its shores and others comprises three main tiers: the hundreds of kilometres away. lower District Courts, the upper High Courts, and the Court of The population of New Zealand is Appeal, with a further and ultimate 1. http://www.worldbank.org/content/dam/ doingBusiness/media/Annual-Reports/ almost 4.8 million. The capital city appeal to the Supreme Court. English/DB2019-report_web-version.pdf is Wellington, but the largest city Until the establishment of the www.morisonksi.com New Zealand 1 Supreme Court (in January 2004), New Zealand’s highest Court of "New Zealand is a free Appeal was the UK Privy Council. market economy that Although there are a number of specialised tribunals and courts competes globally. Its (such as the Environment Court and inflation rate is one the Taxation Review Authority) that have judicial functions, in almost all of the lowest in the cases their decisions can be subject industrial world" to appeal to a higher court. The economy partners being Australia, China, Japan, Singapore, the UK and New Zealand is a free market the USA. economy that competes globally. Its inflation rate is one of the lowest in New Zealand has a very close the industrial world. trading relationship with Australia, governed by the Australia– New New Zealand’s gross domestic Zealand Closer Economic Relations product (GDP) was NZ$ 289 billion Trade Agreement (CER), which has for the year ended March 2018. removed most restrictions on trade In the recent World Bank Doing between the two countries. CER Business survey2, New Zealand was includes undertakings to ensure that ranked as the best country in terms New Zealand is guaranteed access of ease of doing business in the to the Australian market in a number world. New Zealand has also been of industries and to ensure that ranked the 1st least corrupt country, trade develops under conditions of by Transparency International in its fair competition. Corruption Perceptions Index 20173. Foreign investment is welcomed New Zealand has a range of and the government is keen to manufacturing and service sectors, promote economic development, which complements a very efficient business, and employment growth, agricultural sector. The economy is as illustrated by the government’s heavily trade-orientated, with the Grown and Innovation Framework, agricultural, horticultural, forestry, which aims to return New Zealand mining, energy and fishing sectors to the top half of the OECD in terms playing an important role in the of GDP per capita. export sector and in employment. Overall, the dairy sector continues New Zealand has a freely floating to account for the New Zealand’s exchange rate that typically largest export earnings. fluctuates in line with currencies of its major trading partners, especially New Zealand’s dependence on Australia, Japan and the USA. trade means that it is sometimes vulnerable to fluctuations in New Zealand does not operate commodity prices and to its trading any foreign exchange controls or partners’ economic performance. restrictions on either inward or Despite this, New Zealand is a low- outward flow of funds, nor is there risk place to do business, due to the any requirement to report the long-term stability of its economy transfer of funds. 2. http://www.doingbusiness.org/en/ rankings and political climate. 3. https://www.transparency.org.nz/2017- corruption-perceptions-index-ranks-new- New Zealand has worldwide trading zealand-number-one/ relations, its most important trading www.morisonksi.com New Zealand 2 A foreign investor may conduct from taking part in the management Business business in New Zealand under the of the partnership. entities described below. Structures Trust Sole proprietorship A business may be carried on A sole proprietor is an individual, by a trust. A trust can be set up therefore no separate legal entity is whereby the trustee (or trustees) involved. The business is operated owns the business assets and by the individual through the carries on the business on behalf individual. As no distinction is made of the beneficiaries of the trust. between the business assets and A trust does not have separate the personal assets of the individual, legal existence like a company. All the individual is personally liable in transactions in respect of the trust all aspects of the business. There are undertaken by the trustees. is no system in New Zealand of A trust is, however, required to registering a business name except file a tax return; and in certain the reservation of a company name. circumstances, the trustee is Accordingly, there are no special required to pay tax. steps required to become a sole proprietor. Joint venture Partnership A joint venture is an arrangement between two or more entities Partnerships are defined in the who contribute resources for a Partnership Act 1908 as the relation specific purpose, usually for a that exists between persons who limited duration. A joint venture carry on a business in common with will not be jointly and severally a view to profit. A partnership is liable unless the nature of the not a separate legal entity. Partners joint venture so prescribes. A joint are jointly and severally liable venture is itself not subject to tax for the partnership’s debts and and is not required to file an income have unlimited liability.