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Company Formation in New Zealand

Overview :

New Zealand is a highly respected jurisdiction with a modern legal framework and rated the most business friendly nation in the world by the World Bank. Banking services can be offered in and from New Zealand by different types of entities, including but not limited to Registered Banks, Finance Companies, Credit Unions and Building Societies.


Advantages
  • It is recognized as a true onshore financial centre which is not blacklisted by any jurisdiction or authority in the world.
  • It is a member of the O.E.C.D. and World Trade Organization.
  • New Zealand has a common law system, and the majority of legislation including trust law is founded on British law.
  • New Zealand is considered a safe location and offers long term security. It has a Westminster style Government and together with its administration, is stable and competent.
  • New Zealand has a well-developed infrastructure, including a progressive and robust economy and experienced reliable professionals serving global clients
  • New Zealand repealed its entire Banking Act in 1995 and thereby facilitated free entry into the business of financial services.
  • It has DTAA with various countries.
Tax Regime
  • No inheritance tax
  • No general capital gains tax (it can apply to some investments)
  • No local or state taxes apart from property rates paid to local authorities
  • No payroll tax
  • No social security tax
  • No health care tax, apart from a minimal accident compensation tax.
  • Personal tax rate – 33% for income over NZ$70,000.
  • Company tax rates – 28% from 2011.
  • Goods and Services Tax (GST) – flat rate of 15% on almost all purchases.
  • A big attraction if you’re considering living in New Zealand is the tax concession on overseas investment income and pensions that applies for your first four years of living here.
Types of entities

Sole Proprietorship :

A sole proprietorship is the simplest but the riskiest type of business form. A Sole Proprietor is not a separately incorporated entity and therefore the owner and the business are one and the same. The owner personally owns all assets and liabilities of the business. A Sole Proprietor has unlimited liability and there is no protection of personal assets from business risks and liability.


Partnership :

A partnership is an arrangement where individuals and/or entities agree to co-operate to advance their business interests.  Most frequently, a partnership is formed between one or more businesses in which the partners work collectively to achieve and share any profits or losses. The partnership itself does not pay income tax, but instead distributes the partnership income proportionately to the partners who then pay tax on their own respective shares.


Limited Liability Company :

This entity is by far the most popular and successful form of business structure.  A company is a formal and legal entity in its own right, being separate from its shareholders or owners.  The protection that a limited liability company affords to its shareholders is the primary reason for selecting this type of operating entity. The advantages of a limited liability company are continuity of existence, transferability of share and marketplace credibility.  The disadvantages are that directors need to clearly understand their responsibilities under the companies legislation, and the fact that the limited liability protection can easily be eroded in practice by the requirement to provide personal guarantees to certain lenders or creditors.


Trading Trust :

Trading trusts have increased in popularity and have now emerged as an alternative option to owning and operating a business. One of the key advantages of using a trading trust is the flexibility that it provides, particularly with regard to the allocation of business profits to the beneficiaries of the trading trust.


Time period

It usually takes 1 day to set up a company in New Zealand.