New Zealand Government Task Force Calls For ICT Tax Incentives

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

22 November 2002

A government taskforce established in order to find ways to encourage investment and research in the information and communication technology sector, and to stem the ICT brain drain, has recommended the introduction of several tax incentives.

In its report, released on Wednesday and entitled 'Breaking Through The Barriers', the taskforce suggested changes to the R&D tax rules to allow deductibility of ICT product development costs, the introduction of tax-neutral investment vehicles, changes to the treatment of employee share options, and increasing the ability of companies to carry forward tax losses, which would make direct equity investment more attractive.

However, speaking at a press conference on Wednesday, Associate Revenue, Communications and IT Minister, Paul Swain attempted to move the emphasis away from the tax recommendations, and towards the issues raised by the report:

'I don't want to make any further comment except to say that discussion between officials and the taskforce has opened up a whole lot of interesting debates about how expansion occurs in New Zealand relative to other countries,' he announced.

The tax suggestions put forward by the taskforce are understood to be something of an embarrassment to the country's government, which has 'set its face against tax incentives', according to a New Zealand Herald report.

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