Celebrating New Zealand and UK ties
New Zealand has traditionally been a strong trader with the UK, but the post-Brexit Free Trade Agreement (FTA) signed at the end of February 2022, has strengthened the ability to trade between the two countries.
Pre Covid two way goods and services trade was worth New Zealand (NZ) $6 billion. For both countries, the FTA will provide exporters with more favourable access to both countries’ markets. NZ’s export strength has traditionally been agricultural and horticultural products. These products include wine, honey, onions, kiwifruit, apples, fish and seafood together with dairy products including beef and lamb meat.
Imports into NZ from the UK include gin, chocolate and motorhomes.
Services commitments will help provide certainty and expansion
Outcomes on services include specific sectors such as financial services, telecommunications, professional and business services, express delivery services, and international maritime services. NZ and the UK have both agreed to include commitments on a broader range of aviation services, including in the areas of ground handling, airport operations and speciality air services.
Both sides committed to facilitating and expanding the recognition of professional qualifications and registration in each other’s jurisdiction, including an agreement to put in place a work programme to address specific concrete outcomes in this area.
The UK has agreed to extend visa commitments for business people. The categories covered are intra-corporate transferees, installers and servicers, independent professionals, business visitors, and contractual service suppliers.
Commitments will enable partners and dependents of business persons transferred by their companies to be eligible for visa access and also enable ‘graduate trainees’ employed by companies in the UK or NZ to more readily transfer to expand their experience and develop their professional skills.
Why Do Business in NZ?
In 2017, New Zealand was voted 1st out of 189 economies in the World for ease of doing business (according to the IFC World Bank).
New Zealand has for some time scored highly worldwide in terms of less corruption, economic freedom, human development and the OECD’s Better Life Index.
NZ has a relatively deregulated and open economy with a simple tax system.
On the 1st October 1986 NZ introduced GST to their tax system. This was part of a radical change in NZ’s history where deregulation, privatisation, the sale of state assets, and the removal of subsidies, tariffs and price controls led to NZ becoming one of the most free-market economies in the industrial world. Most of these changes have survived to this day.
GST is a flat indirect tax of 15% on ALL goods and services apart from financial services. There are no other exemptions so GST is easy to calculate and manage tax process.
Being a country of two islands in the South Pacific, approximately 3 hours by aeroplane from Australia, New Zealand’s immigrant population in the late 1800s survived in those early years and was dependent on strong food production. The two Islands being long and narrow are subject to different weather patterns. The top of the North Island has warmer weather, the rest of the North Island enjoys good rainfall in winter and is ideal for dairy products while the South Island has a high ridge of mountains running it’s length which is snow-covered for much of the year. These differences add to the contrasting scenic beauty of NZ.
NZ has a population of 5 million people with the biggest city being Auckland with a population of 1.5 million people.
NZ has developed a very clean image because of its food production but also because most of its power is generated by hydroelectric power stations, its nuclear-free policy and low population density.
One of the major attractions of New Zealand, besides its beautiful countryside and scenery, is the more relaxed living philosophy and lifestyle we enjoy.
Rapidly Developing Digital Technologies
Over the last twenty years, New Zealand has developed a host of high technology companies. These companies have launched as startups in NZ to test products and services before scaling offshore. The most successful has been Rocket Lab which was founded in NZ in 2006 and became the first company in the Southern Hemisphere to reach space.
In 2013 the company moved its registration from NZ to the USA and in 2021 announced it was going public with a value of US$44.1 billion. It is now a world leader in space and rocket technology.
The other very successful NZ startup has been Xero. Xero is now a leading worldwide accounting software package that has revolutionised the availability of accounting information for SME businesses.
There are many other examples where NZ based companies are testing their products and services and technologies on the local market before taking them to the world.
How Kreston Reeves Can Help
Our colleagues who are located in the CBD suburb of Ponsonby, Auckland are a 5 partner practise with a team of 25 staff. It had its foundations in 1948 when Ron McGregor set up his offices as a Chartered Accountant. Ron was a Kiwi Rugby league representative who toured England and France in 1947and started his own practice after his return from the tour.
In 2021, they joined Kreston’s associate firm, Expatland and are now playing a leading role in the development of Expatland services in NZ.
McGregor Bailey has been part of Kreston for over 30 years and during that time has offered expertise to overseas companies wishing to set up in NZ. Their local knowledge of the legal, accounting and taxation framework is essential when looking to do business in NZ. Our services include tax efficient structures, corporate and personal taxation, cross border transactions and employment taxes. It is important to note the following differences in NZ:
- There is no capital gains tax except in some special cases.
- There is no inheritance, estate or wealth tax.
- There is no stamp duty.
- There is no gift duty
- There are no local or states taxes apart from property rates levied by local councils.
Although NZ is some distance from the rest of the world – this has both it’s advantages and disadvantages. However, in this technology age, communication over long distance is no longer a barrier to business development.
The FTA between NZ and the UK signed earlier this year reaffirms the long established ties between the two countries and offers opportunities for increased business in both countries.
Cameron McGregor is a Director of McGregor Bailey Chartered Accountants, a member firm of Kreston Global, an international advisory and accountancy network, for which Kreston Reeves is also a member. Find out more here.
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