The Prime Minister’s intervention to speed the tax changes required to make New Zealand a successful financial hub (NZH 2 December, B1) was today welcomed by Chapman Tripp partners, Tim Williams and Casey Plunket.
We have direct experience of our clients’ enthusiasm for basing international funds in New Zealand, and believe this is a great opportunity for our financial services sector.
There is a need for urgency, not just to capture the benefits the initiative will create for the New Zealand economy but also to keep ahead of Australia which is planning similar changes to its law.
New Zealand has a comparative advantage over Australia in terms of the efficiency with which new products can be created and it is a pity that negative tax arrangements continue to prevent our financial services sector from capitalising on this.
The removal of the 28% tax rate on international funds which are administered, but not invested, in New Zealand will remove an anomaly as the tax should never have been imposed in the first place and is holding back opportunities.
The other key ingredient in establishing New Zealand as a domicile for international funds management is through the development of mutual recognition agreements for New Zealand offering documents in Asia, particularly Hong Kong where Australia already has an agreement.
Mr Key’s continuing political commitment and leadership should ensure that progress from here is swift.