NZ Venture Capital Association Says Tax Recommendations Ignored

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

18 December 2009

The New Zealand Private Equity and Venture Capital Association (NZVCA) has welcomed many recommendations from the Capital Market Development Taskforce on how to reduce the compliance burden for fund managers raising small funds, but would have liked to have seen some of its tax recommendations incorporated in the report.

Colin McKinnon, Executive Director of NZVCA, said that the industry was concerned that the Taskforce had not picked up on some of its recommendations around tax.

Although recommendations concerning the removal of some of the tax bias which favor property and portfolio investment entities (PIEs) over more productive investment were reasonable, McKinnon still thought there was scope for targeted relief or exemptions for specific groups supporting productive investment and adding value to the New Zealand economy in the future.

"We hope the government will give the suggestions in the NZVCA Regulatory and Tax Recommendations further consideration,” said McKinnon.

Otherwise the NZVCA thought the report was a step in the right direction, and urged the government to implement the recommendations.

“The Taskforce recommends that the government continue its capital contributions to venture capital. Building the pipeline of high growth companies is vital to improving the performance of New Zealand’s capital markets. The government investment acts as a catalyst to private venture capital investment.

“Recommendations around clearer and broader exemptions to the Securities Act are also an important step for the private equity and venture capital sector. Investors in these sectors are highly informed and have the capacity to fully understand the risks and opportunities," said McKinnon.

The recommendations in the report would reduce the compliance costs for fund managers, expediting the task of raising funds.

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