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Amendment to 2006 Tax Bill

Wednesday, 17 May 2006

Amendment to 2006 Tax Bill

The Minister of Revenue, Peter Dunne, announced today, that after listening carefully to public submissions, the Government will bring in an amendment to the Tax Bill introduced into Parliament today, with the intention of calming ill-founded fears among New Zealanders with overseas investments in companies such as the Guinness Peat Group.

"The Government is eager that the public see the proposed changes to taxation on overseas investments as fair and reasonable and we have listened very carefully to the hundreds of submissions on this proposal," said Mr Dunne.

He said the Government had agreed to a broad proposal that would exclude from the new tax rules for overseas investments in shares, for a period of five years, interests in foreign companies where:

a) The company is resident, and listed on a recognised exchange in Canada, Germany, Japan, Norway, Spain, the United Kingdom or the United States and

b) The company is liable to income tax in the foreign country, because it has its domicile, residence, place of incorporation, or place of management there; and

c) The company is listed on a recognised exchange in New Zealand; and

d) The company is widely held and has a substantial New Zealand shareholder base; and

e) The company is not a mutual fund, or investment trust.

"The five-year holiday will give those companies the opportunity to consider shifting their headquarters to New Zealand, which will bring considerable benefits to this country," Revenue Minister Peter Dunne said.

"The five-year window will also allow time for completion of the government's current review of the controlled foreign company tax rules," he said. "The review will include consideration of whether the rules should distinguish between active investment, such as investing in factories, and passive investment, such as investing in securities.

"This change will be brought in by way of Supplementary Order Paper to the Taxation (Annual Rates, Savings Investment, and Miscellaneous Provisions) Bill," said Mr Dunne.

The Bill was tabled in Parliament today and its first reading is expected next week.

ENDS

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