By Pattrick Smellie
Little-noticed tax changes signed into law this week are a key step in allowing New Zealand to offer back-office financial market services in the Asia-Pacific region, says Craig Stobo, chair of the government-appointed task force that reported on the issue last year.
The law change removing tax obligations on non-resident investors in Portfolio Investments Entities (PIEs) holding only international assets represented “significant progress” in establishing the environment necessary for global funds to have back-office processing occur in a New Zealand hub, Stobo told the Institute of Finance Professionals of New Zealand conference in Wellington yesterday.
While the financial services “hub” idea has languished somewhat, despite initial backing from Prime Minister John Key, Stobo said New Zealand’s opportunity to offer such services in the Asia-Pacific region represented an untapped niche.
While such services were routinely offered from Ireland, Luxembourg and the Cayman Islands, their offerings were “Euro-centric”, with little affinity for Asian markets, and there were no such funds domiciled in the Asia-Pacific region, said Stobo.
“We understand Asia better,” he said. “But the funds have to have zero tax. This is an important part of engaging globally.”
He expected New Zealand PIEs holding foreign assets only to grow relatively quickly, although a more complex alternative regime for PIEs with a mix of New Zealand and international assets, would be slower to grow.
“The Government’s come to the party,” said Stobo. “The call to action is for the private sector get going.”
BusinessDesk
17 Comments
I thought it was this sort of thing, plus the low company tax rate of 14% that attracted the likes of Google and US drug companies to set up in Ireland. This transformed Ireland from a damp and very sad rural backwater to a successful economy. Of course, success went to their heads (Ireland has had its fair share of misery over the years) and they splurged on residential real estate.
The 14% company tax rate was the key thing the Irish wanted to keep - that is what the Germans and French wanted to get rid of. The Irish chose to keep the tax rate as is and told the French and Germans they would let the banks go bust if they were not allowed to keep it.
That's my understanding of it anyway. The Irish outsmarted the Germans by attracting profitable US businesses to a Eurozone country that speaks English. They have a sound manufacturing core they never had before.
On my last visit to Ireland (2010) I was told by an Irishmen that Ireland had two classes, the money class and the slave class, the later being the Irish.
And boy, was it a sad and damp place.
Isn't funny how you and likes of JK worship what most of the Irish loath, at least from my talking to them. No one likes to think of themselves as whores working for multinational pimps, as many Irish now view their country.
There are also import restrictions into the EU....when I left for instance I think Mazda was limited to 10,000 cars per annum......but if they made them in the EU there was no limit.....Hence why many companies went to Ireland, it gave them access to the EU, cheap land, educated english speaking ppl and low taxes....whats not to like?
regards
YES
This is is an excellent idea .
There are many good reasons why ...
We have the skills
Auckland is s great place for funds managers to live and work.
New Zealand is a stable democracy.
We are free of corruption by world standards.
We need a sustainable competitive advantage in multiple secotrs not just dairy.
We need to diversify our income streams and not rely almost solely on food exports and tourism
AND MOST IMPORTANTLY We need to move from a LOW WAGE farm economy to a high wage service economy to increase national income , and tax revenue
Well, yes basically....that and some services costs.....So Telecom/Telstra gets a cut....some data centre like EDS I suppose gets a cut....a few well paid IT jobs (of which we are not short of).....rental for floor space, purchasing fancy chairs....cleaning.....
very little really....
regards
Hey Boatman, what do you make of this idea? http://www.interest.co.nz/news/54980/nz-needs-create-innovation-cycle-b…-
its not a bad idea. And I dont think it would see an influx of foreign companies, NZ companies could easily set up systems to process these, its not rocket science, they alrteady do it and just have to change the tax rate chanrged to non residents.
btw - why is it that we understand Asia better? has anyone ever checked the flight times from Auckland to Shanghai? I think its roughly the same as from london.
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