By Pattrick Smellie
Little-noticed tax changes signed into law this week are a key step in allowing New Zealand to offer back-office financial market services in the Asia-Pacific region, says Craig Stobo, chair of the government-appointed task force that reported on the issue last year.
The law change removing tax obligations on non-resident investors in Portfolio Investments Entities (PIEs) holding only international assets represented “significant progress” in establishing the environment necessary for global funds to have back-office processing occur in a New Zealand hub, Stobo told the Institute of Finance Professionals of New Zealand conference in Wellington yesterday.
While the financial services “hub” idea has languished somewhat, despite initial backing from Prime Minister John Key, Stobo said New Zealand’s opportunity to offer such services in the Asia-Pacific region represented an untapped niche.
While such services were routinely offered from Ireland, Luxembourg and the Cayman Islands, their offerings were “Euro-centric”, with little affinity for Asian markets, and there were no such funds domiciled in the Asia-Pacific region, said Stobo.
“We understand Asia better,” he said. “But the funds have to have zero tax. This is an important part of engaging globally.”
He expected New Zealand PIEs holding foreign assets only to grow relatively quickly, although a more complex alternative regime for PIEs with a mix of New Zealand and international assets, would be slower to grow.
“The Government’s come to the party,” said Stobo. “The call to action is for the private sector get going.”