New Zealand’s coalition government puts tax centre stage in early acts

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

New Zealand’s coalition government puts tax centre stage in early acts

Sponsored by

sponsored-firms-russel-mcveagh.png
new-zealand-dollar-4502244 (1).png

Greg Neill and Emily Briggs of Russell McVeagh summarise a raft of tax developments in New Zealand after the general election brought a change of government and a need to compromise on several election promises

Following New Zealand's general election on October 14 2023, the centre-right National Party formed a coalition government with the New Zealand First Party and the ACT Party to establish the 54th Parliament of New Zealand. The new coalition government replaces the previously governing centre-left Labour Party.

Tax policy was at the forefront of the election and it has remained a key aspect of coalition negotiations, with several necessary changes and compromises arising with respect to the parties' positions on tax prior to the election.

New Zealand minister of revenue

Simon Watts is the newly appointed minister of revenue in New Zealand, being the political office of minister for the department of New Zealand's Inland Revenue, although he is not a member of Cabinet.

A chartered accountant by way of background, Watts has worked in banking and finance roles in New Zealand and offshore. He has private and public sector experience, notably serving as the deputy chief financial officer at Waitemata District Health Board from 2016 to 2020.

Foreign buyer tax on residential property and ‘app tax’

The National Party's election campaign promised tax relief to the "squeezed" middle class through their Back Pocket Boost, with measures such as:

  • Adjusting income tax brackets;

  • Increasing eligibility for tax credits (such as the Independent Earner Tax Credit and Working for Families); and

  • Introducing a new FamilyBoost childcare tax credit.

To deliver on that tax relief, the National Party proposed to introduce a foreign buyer tax of 15% on residential property worth over NZ$2 million, and estimated this would raise revenue of NZ$740 million on average per year. However, the New Zealand First Party's staunch opposition to this proposal as part of coalition negotiations has seen the National Party put a halt to its foreign buyer tax. Instead, the ban on foreign buyers as implemented by the previous Labour Party government in 2018 shall remain in place – this prohibits international buyers from purchasing existing residential property in New Zealand.

To make up for this gap in revenue, the National Party has also decided not to remove the ‘app tax’ introduced by the Labour Party during its last term in government. Currently, under New Zealand's goods and services tax (GST) marketplace rules, operators of electronic marketplaces must collect GST at 15% where supplies of remote services or low-value imported goods are made through it, whether or not the person supplying the goods or services is otherwise liable to be registered for GST.

From April 1 2024, the app tax proposes to broaden the scope of services caught under the GST marketplace rules to include:

  • Accommodation (other than already exempt accommodation);

  • Ride-sharing and ride-hailing services; and

  • Delivery services for food and drinks.

Consequently, users of apps such as Uber and Airbnb will likely see prices increase as a result of GST being charged on services where they previously fell outside the GST net.

Infrastructure funding

Infrastructure is a key focus for the new coalition government, having already agreed on several infrastructure measures. A National Infrastructure Agency (NIA) is proposed to be established, which will expand the mandates and powers of Crown Infrastructure Partners (an existing government entity responsible for managing certain government infrastructure investments), centralising and coordinating the government's infrastructure funding across the executive bodies.

Notably, the NIA will create a gateway for not only domestic but also offshore institutional investors to play key roles in building New Zealand's infrastructure. Offshore investors will have opportunities to invest in long-term infrastructure assets. It remains to be seen whether tax laws, including those relating to limited partnerships, will be changed to more readily facilitate such investment.

A new NZ$1.2 billion Regional Infrastructure Fund was also agreed to as part of the coalition agreement between the National Party and the New Zealand First Party.

100-day plan and beyond

The government has already begun its 100-day plan, comprising of 49 actions, in its effort to stop the squeeze on the middle class. In the tax sphere, this will involve the introduction of legislation to remove the Auckland regional fuel tax and the complete repeal of the Clean Car Discount scheme (otherwise known as the ‘Ute tax’).

The New Zealand economy in 2024

The National Party has had to make compromises regarding tax matters as part of forming the coalition government. As always, the new year promises to be an interesting one as the new government seeks to progress the economy in an environment of high living costs and inflation for New Zealand residents and internationally.

more across site & shared bottom lb ros

More from across our site

If the Reform leader becomes UK prime minister then he may follow the direction of the US in at least one significant way
Trump declared a new national emergency in issuing the order; in other news, Grant Thornton Germany is up for sale and the subject of interest from both its UK and US counterparts
The judgment, which saw Denmark's Supreme Court rely on OECD TP guidance, sets aside more than 15 years of consistent administrative practice, experts have told ITR
Belgium’s new coalition government has gone ahead with a new exit tax regime that could land it in the courts
Brazil’s government has not officially framed the bill as a countermeasure amid trade tensions with the US, but the move is being considered as part of Brazil’s strategic response, one expert tells ITR
Understanding India’s income tax landscape can help charities ensure compliance, optimise tax benefits, and enhance their impact, writes Raghav Bajaj of Khaitan & Co
Tax advisers in Brazil are rising above the country’s notoriously complex tax system to deliver high-quality advisory services, ITR’s exclusive in-house data reveals
ITR’s data has highlighted the US firm’s ambition to become America’s ‘premier’ tax player via a concerted partner recruitment strategy
Jaap Zwaan’s arrival continues a recent streak of A&M Tax investing in the region; in other news, the US and Japan struck a deal that significantly lowered tariff rates
In a world where international tax concepts rely on human activity, Leonard Wagenaar poses existential questions about the future of such ideas when AI is ever-present
Gift this article