Hon Simon Watts
Minister of Revenue

The Government is proposing changes to tax rules which will contribute to encouraging investment in New Zealand, Revenue Minister Simon Watts says.

“We want New Zealand to be a country that attracts and welcomes the sort of talented people who will help grow our economy.

“When we attract Kiwis home or bring in new, smart talent we grow the economy and that means jobs, more opportunities and higher wages for everyone,” Mr Watts says.

“The current foreign investment fund (FIF) rules are a key deterrent for migrants and returning Kiwis, especially in the tech or start-up sector from coming to and staying in New Zealand.”

Proposed changes to the FIF rules involve the addition of a new method to calculate a person’s taxable FIF income, the ‘revenue account method’.

“This will allow new migrants to be taxed on a realisation basis for their FIF interests that are not easily disposable and acquired before they came to New Zealand. For migrants who risk being double taxed due to their continuing citizenship tax obligations, this method can apply to all their FIF interests.

Mr Watts says the change has been positively received by people in the tech and start up sector.

“I have heard from Graeme Muller, the Chief Executive of industry peak body, NZTech that the fast-growing tech sector continues to cry out for experienced high-skilled talent to support global expansion. He says these improvements in tax rules are exactly what we need to make New Zealand more attractive for both investors and global talents.

“I have also heard from Robbie Paul, the CEO of Icehouse Ventures, that this is a stand-up example of Government engaging on a genuine issue so we can all create a brighter future for New Zealand. He suggests foreign investment fund rules have been a deterrent for many of the world’s leading entrepreneurs and investors, including offshore Kiwis. These individuals play an important role in maximising the technology sector’s creation of export revenue and high paying jobs,” Mr Watts says.

The changes would apply to migrants who became New Zealand tax residents on or after 1 April 2024.

“We want to act swiftly to remove barriers for highly-skilled migrants to stay in New Zealand and invest in the growth of our economy, so the proposals will be included in the next taxation Bill, likely to be introduced around August.

“This is an important step and one which the private sector has been calling for, but we need to consider whether more can be done. We are looking more closely at the FIF rules and related international tax settings not only to encourage migration to New Zealand, but also to encourage our own residents to stay and invest in New Zealand.

“The Government will also be looking at how the rules impact New Zealand residents and will have more to say later in 2025,” Mr Watts says.

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