A leading tax economist who had a major hand in the creation of this country's foreign investment tax rules says they are now having the unintended consequence of blocking talented people - including New Zealanders - from setting up base here.
The Government has proposed to change the rules around the Foreign Investment Fund tax regime - particularly to remove the requirement taxing unrealised capital gains on foreign investments. This requires investors get a valuation of assets - whether or not they have been realised - and to pay a tax on those. That is, if they become tax residents of New Zealand, by either spending more than 183 days a year in the country or are deemed to be residents by having a 'permanent place of abode' here.
Peter Wilson was the manager of international tax at Treasury in the 90s and played a key role in developing the Foreign Investment Fund tax regime. He says the policy was aimed at keeping investments tax neutral after a 1984 law change that allowed New Zealanders to more freely invest overseas. Many New Zealanders who've been living offshore, or foreign investors who may be asset-rich overseas, are left in a dance to try avoid being in the country long enough, to trigger becoming a tax resident.
Sam Blackman co-founded successful logistics software company Nuvocargo and has gone on to do a Master of Laws at Harvard where his thesis focused on a critique of the FIF rules. Among his concerns - entrepreneurial Kiwis who want to return home to live and contribute, but are inhibited by these rules.
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