Cullen Mulls Tax Holiday For Foreign Workers

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

13 October 2003

Addressing the 2003 Tax Conference of The Institute Of Chartered Accountants of New Zealand recently, Finance Minister Michael Cullen expressed support for a proposal that will give foreign workers a seven year tax holiday on income earned abroad.

Dr Cullen told the delegates how "some people who come here to work may find themselves facing tax on offshore income that they might not have faced had they made a different choice of residence." He added: "These extra tax costs faced by highly skilled overseas recruits may in many instances already be passed on to New Zealand businesses in the form of higher remuneration."

Dr Cullen explained that it was important to attract foreign talent as the world's economy becomes increasingly knowledge-based. "The people who have these skills are increasingly mobile, and New Zealand businesses have to be able to compete with businesses in other countries to attract them to work here," said Cullen.

"In recent months the government has been developing the idea of a temporary exemption from tax on overseas income for these people, with the focus on reducing costs for New Zealand businesses. We are also considering widening it to include returning New Zealanders who have been out of the country for at least ten years and are coming back to work here," Dr Cullen explained.

The Finance Minister announced that details of the proposals will be released in the coming weeks alongside a discussion document. He also revealed that the government is looking into the idea of attracting foreign investors by exempting share sales profits from tax when they are also exempt in their own jurisdiction.

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