Business Opportunities in New Zealand
New Zealand is said to be one of the most suitable countries to do business owing to its openness to international trade, free-market economic reforms and encouragement to foreign investments. Considering its international expansion, outlook towards foreign investment, good governance and easy entry into the country, New Zealand stands ahead of other nations.
One of the primary reasons that make New Zealand a suitable business hub for western investors is its language. The country has a population of almost 5 million and the people speak English. Besides, the country has people immigrating from Asia and Australia. Therefore, this can be an added advantage for entrepreneurs to expand their businesses and tap into a more potential target audience.
There is no barrier to the monetary flow between investors overseas and New Zealand, and you can effectively set up a business here. With a GDP of US$ 250.8, New Zealand is a strong competitor to other potent nations. Out of the last 35 years, New Zealand has shown immense economic growth in the previous 33 years.
According to the 2020 Doing Business Report of the World Bank, New Zealand bags the first position for ease of starting a business, with the highest DB score of 86.8. So, if you are looking forward to company incorporation in New Zealand, here’s a detailed guide.
Benefits of Starting a Business in New Zealand
The advantages of doing business in New Zealand are as follows:
Effective government and legal system
According to the 2019 Corruption Perception Index, New Zealand is the least corrupt country. It takes pride in following a constitutional monarchy and parliamentary democracy. The legal system of the country makes it a hotspot for foreign investors. Before starting a business, the employer will be armed with the necessary information on his responsibilities and the law. The Reserve Bank of New Zealand, the Overseas Investment Office and the Financial Markets Authority govern foreign investment in New Zealand.
Attractive export market
Export business is one of the major components contributing to New Zealand’s economy. Around 30% of the country’s GDP is due to exports. As per the World’s Top Exports, every resident in New Zealand spends almost $8500 on export sales. So, foreign investors can explore the import and export market of New Zealand well.
Opportunities in business growth
If you consider the geographical location of New Zealand, you will notice that the country is largely dependent on other nations. The country’s raw material sector thrives on other nations’ assistance. Foreign investors can explore the country’s agricultural sector, horticulture market, and fishing industry.
Easy company incorporation procedure
Setting up a business in New Zealand involves many stages that investors must go through. However, this is a smooth process in New Zealand. You can choose a sole trader business, a limited liability company or a partnership business according to your business demands. However, all three have their own set of benefits. A limited partnership is the most suitable type of business for foreign investors and entrepreneurs.
Simple visa processing
Entrepreneurs can easily apply for the Entrepreneur Work Visa with a capital investment of at least NZ$100,000. The visa processing department requires your business proposal to begin the visa proceedings. People not based in New Zealand need a work visa with a tenure of three years. However, no visa or work permit is required for Australian nationals.
Requirements for Starting a Business in New Zealand
Given below are the requirements to do business in New Zealand.
Visa and work permit
- People willing to establish a New Zealand business need an Entrepreneur Work Visa. To get this visa, entrepreneurs should possess an investment fund of at least NZ$100,000. To become a permanent resident of New Zealand, entrepreneurs can apply either after six months or two years.
- Entrepreneurs must invest at least NZ$10 million in the Investor Plus Visa for three years. On the other hand, for an Investor Visa, the entrepreneur has to invest at least NZ$1.5 million for four years. In both these cases, the investment has to be in New Zealand to get residential permanence.
Company name
- When choosing a company name, a rule of thumb is to select a unique name that is not identical to any other company and highlights the company’s objective.
- To gain more authenticity and trademark rights, consult with the Intellectual Property Office of New Zealand.
Company address
- For company incorporation in New Zealand, a business has to have three essentials:
- A registered office to maintain records
- An address for service to deliver legal documents
- An address for communication
- Both the service address and the registered office’s address should be in New Zealand. You can provide a physical and email address for communication purposes.
Taxation
- New Zealand has a corporate tax of 28% and a GST of 15%.
- Every business has to pay an income tax each year. This income tax is dependent on the net taxable income.
- There is also a Provisional tax, which you can pay in installments. There are three methods of paying provisional tax: standard, estimated, and ratio.
- To meet workplace injuries of the employer and the employees, an annual accident compensation corporation (ACC) is levied. This ACC depends on the business’s earnings, your business, and the amount paid to employers.
- Businesses that work with employees need to pay PAYE or Pay As You Earn tax to the Inland Revenue of New Zealand.
Business Capital
- Regarding the cost of incorporating a company in New Zealand, no business capital is required.
- However, foreigners must possess a minimum working capital of NZ$ 100,000 and 120 points in the grading system to get both residential and Entrepreneur Work Visas.
Directors and Company Secretary
- Every business should have at least one director and a shareholder with one company share.
Types of Business Structures in New Zealand
To set up an offshore company in New Zealand, these are the four different types of business structures workable in New Zealand:
Sole trader
- Business is operated under your name
- Formulate tax under your name
- Does not have any division between business and personal liability
Limited company
- Governed by the Companies Act
- Have to pay its tax liabilities and tax return
- Should have one or more shareholders who can be part of the trustee or other limited companies
- Its liability is limited to the company and is not transferred to shareholders.
Partnership
- In partnership, the parties involved are usually individuals operating small businesses.
- Does not have any distinction between business and personal liabilities
- Partners are liable for the business debts
- Devoid of limitation of liability
Joint venture
- It involves two or more parties and is similar to a partnership.
- Business debts are not bestowed on any party
- Liabilities and assets belong to the parties of the joint venture
Company Registration Process
The company registration process in New Zealand is given below in a stepwise format:
Step 1: Incorporating a company
- Before applying for company incorporation in New Zealand, you must create an online service account to reserve the company name.
- Companies can visit RealME and create an account with the Companies Register.
- Reserving the name of a company will cost you $10, along with the GST. For company application, you will have to pay $118.74, added with GST.
Step 2: Company address
- Businesses must provide a proper address and valid contact details and register both under the Companies Register.
Step 3: Registering appointment of a director
- In this step, you must submit the online application to the Companies Office.
- Within 20 working days, you will have to register a new director.
Step 4: Filing shareholder and director consent forms
- Registering all the shareholders and company directors is a must when submitting an online application for company incorporation.
- Each shareholder and director must sign a consent form to finalize the registration.
- This signed consent form has to be returned to the New Zealand Companies Office within 20 days before 5 pm.
Step 5: Company incorporation constitution
- A company in New Zealand can be incorporated with or without a constitution.
- When you incorporate a company with a constitution, the Companies Act 1993 governs it.
Step 6: Ultimate holding companies
- Here, you must convey to the New Zealand Companies Office that it has a controlling interest in your company’s management, board and policies.
- Within the next 20 days after company incorporation, you must confirm whether UHC controls your company.
Step 7: Reserving a company name
- Before you reserve a particular name for a company, it is necessary to find out if it is unique. Every company and business must abide by the rules of The Companies Act 1993 when selecting and reserving a company name.
Step 8: Tax registration
- In this stage, you must apply for the company’s IRD number and register for goods and service taxes.
- Once the tax registration process is covered, you will get the GST number, the inland revenue and the company’s certificate of incorporation.
How Much Does it Cost to Incorporate a Company in New Zealand?
There is no minimum capital needed to start a business in the country. However, to register a company, you must pay the following fees –
- To reserve a company, you must pay a registration fee of NZ$10, along with the GST.
- The total company incorporation fee and the goods and service tax amount to NZ$ 114.39.
- While registering a business, you will have to pay a fee of NZ$150.
- An additional license fee is charged, which varies depending on the business license required.
Are Foreigners in New Zealand on Certain Passes Allowed to Start a Business in New Zealand?
Yes, foreigners from different countries can go ahead with offshore company registration in New Zealand, provided they have an Entrepreneur Work Visa. Along with Immigration New Zealand, entrepreneurs also need a Residential Visa.
Government Assistance for Foreign-Owned Businesses
The government provides grants for starting a business in New Zealand. These are the different governmental grants that entrepreneurs can get to start a new business in New Zealand:
- Business training and advice grant
- Capability development vouchers
- R&D grants
- Flexi-wage subsidy
- Energy management support
How Can Multiplier Help?
When setting up a firm in New Zealand, you must pay attention to the administration and compliance requirements. You can contact a global platform like Multiplier to ease the process.
At Multiplier, we have a pool of experts to take care of your business establishment. As a popular EOR platform, we promote the seamless onboarding of international talents. In addition, the infrastructure of Multiplier provides the best talent in the country. Besides hiring talents, we can help you reach out for employment contracts, get insurance benefits and many more.