Cullen Confirms Tax Changes To Encourage Foreign Investment

by Mary Swire, Tax-News.com, Hong Kong

30 October 2003

Speaking to the New Zealand Venture Capital Association's second annual conference yesterday, Finance Minister Michael Cullen confirmed that changes to tax rules to encourage foreign investment in new ventures will go ahead next April.

Dr Cullen told the conference that the government plans to repeal the tax provisions preventing resident special partners from offsetting partnership losses against other income, with the proviso that new deferred deduction rules are passed by parliament in their present form, the National Business Review Reported. This would then remove the disincentive to resident partners investing alongside non-resident partners in special partnership arrangements.

The Finance Minister also said that the government is forging ahead with plans to remove barriers to international venture capital investment by exempting certain non-residents from tax paid on profits derived from shares in small, unlisted New Zealand Firms. It is intended that this will be applicable to non-residents who are exempt in their own countries, and who therefore cannot claim New Zealand tax credits. It will also be available to residents of nations which have a double tax agreement with New Zealand.

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