Setting up Business in New Zealand


This background paper summarises the requirements for setting up business in New Zealand under New Zealand law and outlines important features of New Zealand law relevant to conducting business in New Zealand.

Corporate Structure

The New Zealand Companies Act 1993 (“the Companies Act”) sets out the main requirements for companies domiciled overseas to operate in New Zealand. This can be achieved by:

  • Incorporation of a new subsidiary company under the Companies Act 1993; or
  • Registering the foreign company as a branch in New Zealand; or
  • Acquiring shares in a pre-existing New Zealand company or entering a joint venture with a New Zealand company.

Incorporation of a Subsidiary

The Companies Act requires the following for the incorporation of a new company:

  • At least one shareholder and one director (companies must have at least one director who lives in New Zealand, or lives in Australia and is a director of a company incorporated in Australia, subject to limited exceptions);

  • Share capital (there is no required minimum size or par value);
  • Where the company chooses to have a constitution, the constitution must be filed with the New Zealand Companies Office (“Companies Office”), along with a notice in the prescribed form in the Companies Act notifying the registrar of the adoption of the constitution; and
  • All the prescribed forms are to be filed with the Companies Office, including the particulars of the directors and shareholders (which includes an Inland Revenue number for individuals if the shareholder is an New Zealand resident and the company wishes to register for tax), certified photo identification and proof of address of the directors, and the address of a registered office in New Zealand where correspondence can be sent and official documents can be served.
  • Each director and shareholder must be available to sign and return a consent form within 20 working days.

The ongoing statutory requirements after incorporation include:

  • Preparing and filing audited financial statements with the Companies Office in certain circumstances (see Reporting Obligations below);
  • To file an Annual Return;
  • To use its full and correct company name on all its correspondence and legal documents; and
  • To prepare an annual report in accordance with the Companies Act unless all shareholders waive their right to have an annual report prepared.

Registering a Branch

The Companies Act requires every overseas company that carries on business in New Zealand to register as an overseas company (referred to as a “branch”).  

The requirements for registration are:

  • Within 10 days of commencing trading, the overseas company must:

       i.  File a reservation of company name; and

       ii. File all other prescribed registration forms at the Companies Office;

  • To lodge a certified copy of the company’s Articles and Memorandum of Association or its Constitution; and
  • To lodge particulars of a nominee resident in New Zealand to whom documents can be served and communications can be sent on the company’s behalf (a resident director is not required).

The continuing requirements for a branch include stating both its full name, and the country in which it was originally incorporated, in all correspondence and legal documents, and in certain circumstances preparing and filing audited financial statements with the Companies Office (see Reporting Obligations below).

The penalty for failure to register is a fine for the overseas company and each of its directors of up to NZ$10,000.

Reporting Obligations

Whether a branch or a subsidiary is required to prepare and file financial statements with the Companies Office depends upon whether the overseas company or the subsidiary:

(i)   Is “large”; or

(ii)  Has more than 10 shareholders (on the first day of the relevant accounting period).

A company will be “large” where:

(a)  As at the balance date of the 2 preceding accounting periods, the total assets of the entity (including any subsidiaries) exceed $20 million; or

(b)  In each of the 2 preceding accounting periods, the total revenue of the entity (including any subsidiaries) exceeds $10 million. 

Where the company is not “large”, but has more than 10 shareholders, the financial reporting obligations are optional and the company may elect to opt out of any or all of the following requirements:

(i)    Preparation of financial statements (or group financial statements);

(ii)   Audit requirements; and

(iii)  Obligation to prepare annual report.   The position may differ where the company is an issuer or is required to prepare financial statements under the Financial Markets Conduct Act 2013. 


Where an overseas company conducting business in New Zealand through a branch is large, the overseas company must prepare and file audited financial statements with the Companies Office. 

The company may also be required to prepare separate financial statements for the New Zealand business (as though it were conducted by a company formed and registered in New Zealand) if that New Zealand business is also “large”. 

If the overseas company is not large, but has more than 10 shareholders it may choose whether it prepares audited financial statements, and is not required to file these with the Companies Office.

Subsidiaries (50% or greater foreign ownership)

Where the New Zealand subsidiary has more than 50% foreign ownership and is large, the subsidiary company must prepare audited financial statements, which comply with generally accepted accounting practice and file those financial statements with the Companies Office.

Partial Foreign Ownership (less than 50% foreign ownership)

In addition to foreign-owned subsidiaries (discussed above), a New Zealand company must prepare and file audited financial statements if:

(i)   The right to control or exercise 25% or more of the voting power of the company is held by an overseas company or a non-resident; and 

(ii)   The company has assets which exceed $60 million, or turnover which exceeds $30 million. 

Overseas Investment Controls

Overseas investment in New Zealand is regulated.  The Overseas Investment Act 2005 sets out the circumstances in which the consent of Land Information New Zealand (“LINZ”) is required for overseas investment in land (or land owning companies) or significant business assets.  

Before an overseas person invests in New Zealand, it is prudent to consider whether that investment will require consent.  Whether or not consent is required depends on the amount of money involved and the type of investment being proposed.  In granting consent, the Overseas Investment Office  a department of LINZ, will take into account a number of factors including such things as the proposed residency of the purchaser and their commitment to New Zealand. 

To obtain consent an application must be made to LINZ.  There are a range of application fees, depending on the specific consent being sought.  Application fees can be up to NZ$110,000 in some cases (although most fees are significantly less than this).  The Act also provides for a large range of fines and even imprisonment for failing to comply with its provisions.

In relation to farm land, the Act defines a procedure for the purchase of “farm land”.  LINZ will not approve overseas investment in farm land unless that land has been first offered for sale or acquisition on the open market to New Zealanders.  LINZ will also consider whether the overseas investment in the farm land will, or is likely to, result in substantial and identifiable benefits to New Zealand.


In New Zealand taxes are levied under several regimes, including:

  • Income tax;
  • Goods and services tax (“GST”);
  • Fringe benefit tax;
  • Withholding tax; and
  • Import tariffs and miscellaneous excise duties.

As a general rule New Zealand capital gains or deceased estates are not taxed.

It should be noted that certain transactions in other jurisdictions that might attract capital gains can be assessed in New Zealand for income tax, for example some capital profits derived from transactions involving land will be treated as assessable income. 

Stamp duty was abolished in New Zealand in 1999.

Income Tax

  • The tax rate for resident and non-resident companies is a flat rate of 28%. Persons and companies resident in New Zealand pay tax on their worldwide income. Persons and companies not resident in New Zealand are subject only to tax on any income they derive in New Zealand. For tax purposes a company is resident in New Zealand if:
    • It is incorporated in New Zealand; or
    • It has its head office in New Zealand; or
    • It has its centre of management in New Zealand; or
    • The control of the company by its directors is exercised in New Zealand.
  • For individuals, marginal rates are from 10.5% to 33%. Employers deduct income tax on a pay as you earn (“PAYE”) basis from wage and salary payments to employees and pay the deductions to Inland Revenue directly.  This deduction is made on account of the employee and at the end of the tax year any necessary adjustments can be made.
  • The types of income that are subject to taxation are not precisely defined in the legislation.  There are many specific exclusions and inclusions that make up taxable income.
  • New Zealand is also a signatory to numerous Double Taxation Treaties with foreign countries.  This means that, in general, New Zealand allows a tax credit for foreign tax paid.  This tax credit is the lesser of the foreign tax paid or the New Zealand income tax payable.  The tax credit available may change depending on the particular Double Taxation Treaty.
  • New Zealand operates a full dividend imputation system.  This means that tax paid by resident companies creates imputation credits.  These credits can be attached to dividends paid by that company.  Where a dividend is fully imputed, it will be tax-free where the dividend is paid to a New Zealand resident.

Non-Resident Withholding Tax

  • Dividends, interest and royalties paid to non-residents are subject to non-resident withholding tax.  The tax rates are:
  • 30% of the gross amount of dividend payments, except for a number of special types of dividends including fully imputed dividends; and
  • 15% of the gross amount of interest or royalties.

However, a Double Taxation Treaty between New Zealand and the relevant overseas country may reduce these rates.

  • Non-resident withholding tax may not need to be deducted on interest when the non-resident is engaged in business through a fixed establishment in New Zealand, but then resident withholding tax would apply.
  • Non-resident withholding tax on interest can be reduced to 0% where the payer is an approved issuer and the interest is paid in respect of a registered security under the Approved Issuer Regime.

Goods and Services Tax

  • GST is an indirect tax on most goods and services.  Usually GST is charged at a flat rate of 15%.  However, in some limited situations, for example, when goods are exported or services are supplied to a non-resident outside New Zealand or a business is sold as a going concern, GST is charged at the rate of 0%.
  • Financial services and rental paid for private accommodation are two of the major exemptions from GST.
  • Businesses are able to register for GST which means they can claim input credits for any GST they incur in conducting business. They must charge GST on goods and services provided, and file returns and pay to the Inland Revenue the net GST collected.
  • Although GST Registration is not mandatory until “supplies” exceed NZ$60,000 in any twelve month period (or if there are reasonable grounds for believing that supplies will exceed NZ$60,000 in the following twelve months) most companies will want to register for GST immediately because of the cost of financing the GST while not registered.  Businesses may voluntarily register for GST before they are required to do so, and there may be different timing and factual situations where this is advantageous.
  • Businesses with annual turnover less than NZ$250,000 may, on application, file returns six monthly, businesses with annual turnover between NZ$250,000 and NZ$24,000,000 must file two-monthly returns, and businesses with annual turnovers of more than NZ$24,000,000 must file monthly returns.
  • When goods arrive into New Zealand, they are subject to GST which is calculated and collected by the Customs Department as if it were customs duty.  It is normal practice for the GST to be paid on importation.  However, if the importer has a deferred payment account with the Customs Department, GST can be paid on a monthly basis. Importers (including foreign companies) who are registered for GST and who intend selling goods in New Zealand can claim back the GST paid on importation. 

Fringe Benefit Tax

  • Employers who provide non-cash benefits to employees while they are at work must pay fringe benefit tax.  This includes interest free loans, company vehicles and discounted goods.  The fringe benefit tax rate is  49.25%  of the taxable value of the benefit, although an election may be available to pay fringe benefit tax at attributed rates of as low as 43%.  This is a tax deductible expense for employers. 
  • Superannuation Schemes that have been registered under the Financial Markets Conduct Act 2013 (FMC Act) are taxed at usually 30 - 33% on the income of the scheme, however benefit payments to employees are exempt.

Pricing for Income Tax Purposes

Transfer Pricing Regime

New Zealand has a transfer pricing regime which may regulate the price of transactions between a New Zealand entity and a non-resident “associate”. If the price charged has the effect of reducing the New Zealand taxpayer’s net income, the tax charged will instead be based on an “arm’s length” price (i.e. at the price that would have been charged if there was no association between the parties). 

The transfer pricing regime applies in arrangements for supply of goods, services or intangible transfers such as royalties, trademarks, management fees and inter-company guarantees, where the arrangement is between companies, one of whom has more than 50% voting, ownership or income interest in the other company, and either:

  • One (or both) of the companies concerned is non-resident in New Zealand for tax purposes; or 
  • Both companies are resident in New Zealand, but the purpose of the arrangement is that one of the companies carries on business overseas.

The transfer pricing regime does not directly apply to arrangements within a branch company as there is only one entity, however there are equivalent income apportioning provisions (see below).  

There is a high level of responsibility on the company to exercise judgement in determining the correct pricing method for calculating transfer prices, and maintain adequate documentation to evidence that transfer prices for things imported were accounted for at arm’s length, and the pricing method chosen to calculate that price complies with the requirements of the regime in respect to accuracy, completeness etc.

The documentation requirements under the transfer-pricing regime place a high level of responsibility on the taxpayers to:

  • Exercise judgement in determining the correct pricing method for calculating transfer prices; and
  • Maintain adequate documentation.

While documentation is not specifically required by the legislation, the IRD Guidelines suggest that companies should prepare and maintain adequate documentation in case the IRD require proof that:

  • The transfer prices for things imported were accounted for at arm’s length; and
  • The pricing method chosen to calculate that price complies with the requirements of the regime in respect to accuracy, completeness etc.

Non-compliance with the regime is considered by the Commissioner of Inland Revenue to be (at least) a failure to exercise reasonable care or even gross carelessness which brings with it minimum penalties of between 20% and 40% of the underpaid tax.

Apportionment of Branch Income

For income tax purposes, a branch company is not considered an ‘associated person’ in relation to the overseas parent company therefore the transfer pricing regime does not apply.  However, the branch is a resident for tax purposes and it receives taxable income for the overseas company.  

The income received by the branch is assessed for New Zealand income tax on an apportionment basis.  The amount of apportionment varies depending on the type of goods and services being traded.  

An alternative form of assessment of the branch company’s taxable income is for the branch to submit a profit and loss account of the business done in New Zealand.  This profit and loss account should be accompanied by a certificate from a chartered accountant stating that no charges have been made for interest on capital or reserves or any unusual depreciation or other charges.

The apportionment is calculated to produce a net taxable income or loss that would have been made by a company which carried out business totally independent from its overseas parent.  In this respect, the assessable income should be similar to that calculated under the transfer pricing regime.

Foreign Employees

Anyone who is not a New Zealand resident or citizen will require a work permit in order to work in New Zealand.  This general rule does not apply to Australian citizens.  Australian citizens may work in New Zealand without restriction. 

There are five different types of work permits available depending upon the person’s circumstances.  They are for entry:

  • As a skilled migrant;
  • For temporary work;
  • Under the work to residence scheme;
  • As an employee of a relocating company; or
  • For a working holiday.

Skilled migrant

This category usually applies to migrants coming to New Zealand of their own accord and without a sponsoring employer.  These migrants need to satisfy a number of requirements before applying for residence.  These requirements include age, health, character and English language ability.

Temporary work

For a temporary work visa to be available the applicant must:

  • Have an offer of a job from a New Zealand employer; 
  • Be skilled in an occupation that is in demand in New Zealand (a list is available and regularly updated);
  • Want to work temporarily for a particular purpose or event such as a tournament, a show or for certain professional reasons;
  • Be a student or trainee wanting to gain work experience in New Zealand;
  • Be a student who is eligible to work in New Zealand after completing their studies; or
  • Be planning
  • to work temporarily while joining their partner in New Zealand.

Work to residence

This category allows a migrant to work temporarily in New Zealand as a step towards gaining permanent residence and is available if a migrant:

  • Has an exceptional talent in sports or the arts; or
  • Is qualified in a highly specialised or “in-demand” field. 

Employee of a relocating company

Key employees of a business that relocates its operations to New Zealand are eligible to apply for a work permit and later a resident permit under this category.

There are requirements for both the employee and employer business.


  • The employee needs to be a key employee of the relocating business.
  • The employee must be not eligible for residence under any of our other residence policies.
  • Any partner or dependent children coming with the employee need to meet English language requirements.
  • All residence applicants must be of good health and character.

Employer Business

  • The business is one that will be successful and will trade profitably in New Zealand.
  • Industry New Zealand must confirm – when the Immigration Service consults with it – that it supports the relocation of the business to New Zealand. 
  • The business must operate within all relevant New Zealand employment and immigration laws, including those relating to minimum wage rates, holiday, sick and special leave, and requirements for the occupational health and safety of employees.

Working holiday

Any person aged between 18 and 30 years may be eligible to apply for a working holiday visa.

Employment Contracts

Overseas Employment Contracts

Where an employee is working in New Zealand for a foreign company under contract, that employment contract can state which jurisdiction governs the employment relationship so long as that choice is fair and reasonable to both parties. 

Where the contract is silent on which country’s law shall apply, the New Zealand courts have ruled that the country with which the contract has the closest and most real connection is the jurisdiction that will govern the contract.

Once an overseas company becomes a branch or sets up a subsidiary company in New Zealand, any employment contract that it may enter into is subject to the same laws as a New Zealand company, whether the employee is a New Zealander or a foreign national.

New Zealand Employment Contracts

Employment contracts in New Zealand are governed by the Employment Relations Act 2000 and case law.  There are also some specific regulations and statutes which govern minimum wages, holidays and working conditions. Since the Employment Relations Act was enacted, employees have had the choice of entering into individual or collective employment agreements.

The employment contract must contain effective procedures to deal with employment relationship problems, including 

The employment contract must contain effective procedures to deal with employment relationship problems, including:

  • Complaints of unjustified dismissal;
  • Unjustified action disadvantaging an employee;
  • Discrimination;
  • Sexual harassment; and 
  • Duress.

The contract must comply with the minimum standards and disclosure requirements as set out in legislation such as:

  • The Minimum Wage Act 1983;
  • The Holidays Act 2003;
  • The Parental Leave and Employment Protection Act 1987;
  • The Health and Safety at Work Act 2015; and 
  • The Accident Compensation Act 2001.

In New Zealand, employees have full protection from unjustified dismissal. An employer with less than 20 employees may employ a new employee on a trial period for the first 90 calendar days of their employment. This trial period is subject to restrictions, and must be agreed by the employer and employee in writing before the employee commences work.

Trade Practices

There are three principal laws governing trade practices in New Zealand:

  1. The Commerce Act 1986;
  2. The Fair-Trading Act 1986; and
  3. The Consumer Guarantees Act 1993.

There are other consumer protection laws which also may have an impact on trade in New Zealand, for example the Contract and Commercial Law Act 2017 and the Credit Contracts and Consumer Finance Act 2003 Act.

1. Commerce Act 1986

This Act deals with issues such as:

  • Anti-competitive trade practices;
  • Merger and acquisition regulation; and
  • Price control.

Approval of the Commerce Commission, which enforces the Act, is required for any business acquisition which has or may have the effect of substantially lessening competition in a market.

2. Fair Trading Act 1986

This Act deals with the way in which businesses interact with consumers and other businesses.  Under the Fair Trading Act, conduct in trade which is unfair, misleading or false is illegal. The Act covers conduct of persons “in trade” which may mislead as to:

  • The nature, characteristics, suitability for a purpose or quantity of services;
  • The nature, manufacturing process, characteristics, suitability for a purpose, or quantity of goods.

3. Consumer Guarantees Act 1993

This is the main piece of consumer protection legislation that is designed to give consumers rights against retailers, manufacturers and importers in relation to faulty and poor quality goods and services.

The Consumer Guarantees Act 1993 is restricted to sales of ordinary household goods and services to ordinary consumers and does not cover transactions with business to business transactions that do not involve consumer goods.  There is the ability to expressly contract out of the Act only in situations where the goods and services are purchased for business use.

The Commerce Commission is the government body in charge of administering and enforcing these three pieces of legislation.  However, this does not preclude civil actions under these three Acts.

Privacy Act 1993

This legislation places controls on how businesses deal with information about individuals obtained in the course of business.  There are specific procedures laid down in the Privacy Act 1993 which must be complied with when obtaining information and in any subsequent use or disclosure of the information.  

The major requirements are:

  • That any personal information collected is collected for a lawful purpose connected with a function or activity of the collecting “agency” (an agency is broadly defined as any person or body of persons, whether corporate or unincorporated, and whether in the public sector or the private sector);
  • That the collection is necessary for that lawful purpose;
  • That an agency, in general, must collect personal information directly from the individual concerned;
  • To inform the individual concerned that information about them is being collected and the purpose for collecting that information;
  • Not to use or disclose information obtained other than for the use specified; and
  • The person who the information is about must be given reasonable access to the information to check for errors etc.

The Privacy Act 1993 is enforced by a Privacy Commissioner.

Intellectual Property Laws

Since signing GATT and the Berne Convention, New Zealand has updated its Intellectual Property laws.  Intellectual Property rights are covered by the following statutes:

Copyright Act 1994

The Copyright Act is based on the concept of ‘works’ which give the copyright owner the automatic exclusive right to (and to authorise any person to) copy, adapt, distribute, perform and broadcast copies of the work. Works which are protected by the Copyright Act include:

  • Literary works (this includes computer programs written in code);
  • Dramatic works;
  • Artistic works (including drawings, moulds, designs etc.);
  • Musical works;
  • Film and television; and
  • Cable programs (including Internet).

There is no requirement for registration of the work to gain protection under this Act, as it is automatic.  Generally, the duration of the protection granted for most of the works is 50 years from the death of the creator of the work. There is no longer protection for copyright owners from the importation of protected works.

Patents Act 2013

This statute gives the inventor an exclusive monopoly on the use of the registered invention for 20 years from registration. These rights include the exclusive rights to make, use, sell or import the invention in New Zealand and to authorise others to do the same.

Trade Marks Act 2002

This Act allows the registered proprietor the exclusive right to use the registered trademark in relation to goods and services.  There are a number of prerequisites including being non-generic and the continued use and protection of the trademark.  

Designs Act 1953

This Act protects the rights of designers in their industrial designs.  The Design Act requires the design to be registered.  Once registered the protection lasts for 5 years with the right to renew the registration.  This protection is rarely used as industrial designs are automatically protected under the Copyright Act for the life of the author plus 50 years.

Common Law 

New Zealand has also retained the common law protection against unauthorised exploitation of business goodwill by using the company name, logos, packaging and other marketing tools.

James Carnie
PO Box 1305
New Zealand
Phone: +64 9 306 8000
DDI: +64 9 306 8002
Fax: +64 9 306 8009


This Background Paper by its nature cannot be comprehensive and cannot be relied on by any client as advice. This Background Paper is provided to assist clients to identify legal issues on which they should seek legal advice when setting up business in New Zealand. Please consult the professional staff of Clendons for advice specific to your situation.