Government Moves to Attract Skilled Talent with Tax Rule Changes

The move has been welcomed by industry leaders, particularly in the fast-growing tech sector, which has long called for policy adjustments to support global expansion.

The New Zealand Government is set to introduce significant changes to the country’s tax rules, aiming to foster investment and attract skilled professionals, according to Revenue Minister Simon Watts.

"We want New Zealand to be a country that attracts and welcomes talented individuals who can help grow our economy. When we bring back Kiwis or attract international talent, we create jobs, opportunities, and higher wages for everyone," Minister Watts stated.

Reforming Foreign Investment Fund Rules

A key aspect of the proposed changes involves the revision of the Foreign Investment Fund (FIF) rules, which have been seen as a major deterrent for migrants and returning Kiwis, particularly in the tech and start-up sectors. The government plans to introduce a new taxation method, the ‘revenue account method,’ to improve the tax treatment of FIF interests.

Under this method, new migrants will be taxed on a realisation basis for FIF interests that are not easily disposable and were acquired before their arrival in New Zealand. For those who may face double taxation due to their existing citizenship tax obligations, this method would apply to all their FIF interests, easing their financial burden and making New Zealand a more attractive destination.

Positive Industry Feedback

The move has been welcomed by industry leaders, particularly in the fast-growing tech sector, which has long called for policy adjustments to support global expansion.

Graeme Muller, Chief Executive of NZTech, emphasized that the tech industry is in urgent need of experienced high-skilled professionals. "These improvements in tax rules are exactly what we need to make New Zealand more attractive for both investors and global talent," he said.

Similarly, Robbie Paul, CEO of Icehouse Ventures, hailed the proposal as a prime example of government responsiveness. "Foreign investment fund rules have been a deterrent for many of the world’s leading entrepreneurs and investors, including offshore Kiwis. These individuals are crucial in maximizing the technology sector’s ability to generate export revenue and create high-paying jobs," Paul remarked.

Implementation Timeline

The proposed changes will apply to migrants who become New Zealand tax residents on or after 1 April 2024. The government aims to swiftly remove obstacles for highly skilled migrants, with the proposals slated for inclusion in the next taxation bill expected to be introduced around August.

Minister Watts also highlighted the government’s commitment to broader tax reform. "While this is an important step, we need to assess if further action is needed. We are reviewing the FIF rules and related international tax settings to not only attract migrants but also retain our own residents and encourage their investment in New Zealand," he said.

The government is expected to provide further updates on the impact of these tax rules on New Zealand residents later in 2025, signalling continued efforts to refine the country’s investment and migration policies.