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Notified foreign investors (NFI) invest in two types of foreign portfolio investment entities (PIEs). These PIEs let investors have a tax result similar to what would apply if they invested directly in the PIE's assets.

A non-resident who derives non-New Zealand sourced income is not liable for New Zealand income tax on that income.

Foreign PIEs can use 0% PIR for the offshore income they attribute to the NFI.

Once every year foreign PIEs must check their investors are still NFIs.

Foreign zero-rate PIE

Zero-rate PIEs invest most of their funds in non-New Zealand based investments. These PIEs only have a minimal amount of funds in New Zealand.

A zero-rate PIE applies 0% PIR to all income attributed to NFIs.

Foreign variable-rate PIE

Variable-rate PIEs invest their funds in New Zealand and offshore.

There is no New Zealand-based investment threshold for this type of PIE.

These PIEs apply the following rates based on the type and source of income:

  • All offshore income: 0%
  • Income under the financial arrangement rules other than interest: 0%
  • New Zealand interest income: 1.44%
  • New Zealand unimputed dividend income with an investor that is affected by our double tax agreements: 15%
  • New Zealand unimputed dividend income with an investor that is not affected by our double tax agreements: 30%
  • Any other New Zealand based income: 28%

A variable-rate PIE can sometimes treat the unimputed portion of New Zealand dividends as liable for non-resident withholding tax (NRWT). This allows the NFI to claim a tax credit in their country of residence. This income is not treated as PIE income.

Look-through entities

A retail foreign investment PIE that invests into a wholesale PIE can treat the wholesale PIE as a look-through entity. This lets the PIE identify the NFI's:

  • source and type of income
  • expenses.
Last updated: 28 Jan 2020
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