Mahesh Muralidhar: Phase One Ventures CEO on the changes to the Foreign Investment Fund

There are hopes proposed changes to the Foreign Investment Fund will boost our own productivity. 

The changes will allow new migrants to be taxed on a realisation basis for interests not easily disposable and acquired before coming to New Zealand. 

Revenue Minister Simon Watts says the legislation for this will likely be introduced in August. 

Phase One Ventures chief executive Mahesh Muralidhar told Andrew Dickens there are also opportunities to transfer skills from migrants to our entrepreneurs. 

He says it allows for more Kiwis to start investing and playing a global game, which is the main thing we need to do to be more productive. 

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Episode Transcript

Speaker 1 (00:00):
Right. The government's proposing tax changes to make things easier
for foreign investors starting new businesses in New Zealand. So
countless tech companies choose to leave early into their business
life or they relocate to start in the first place
because they feel that conditions are better overseas and there's
more chance for growth. So these changes I hope to
make it easier for them to start up, but they're

(00:21):
most critically to stay and then grow. So Phase one
Ventures CEO Mahesh modernly Da is joining me this morning,
Helen Mahet, Good morning, Andrew. So how will these changes
help tech startups like yourself?

Speaker 2 (00:34):
Yeah, So the change is that Revenue Minister from what
has suggested is a change on rules that allow foreigners
to come in and also returning quees like myself to
come back home and make sure that out the unrealized
assets it overseas aren't taxed. So in Australia, US, United Kingdom,

(01:01):
Hong Kong, Singapore, when someone has unrealized gains like equity
in a startup, equity in your startup that you built,
it doesn't get tacked until it's realized. In New Zealand
right now, it gets packed even if it's not liquid.
This prevents people who've done these school things and have

(01:22):
all of these skills from coming to New Zealand or
coming back home returning quies too, because they're going to
get tacked on cash that they don't have.

Speaker 1 (01:31):
Of course, there's a bit of a no brainer. Really,
you can't get text until you're making a profit. Meanwhile,
you're trying to finance yourself and keep yourself going while
you build the business. So that's a good thing. But
is there anything they missed? Would you have liked to
have seen more in the announcement?

Speaker 2 (01:44):
So I think there's an opportunity to no. I think
first of all, this is fantastic, right, like we're coming
up to turn with international based practice. One of the
biggest reasons I was one of the first guys at Canvas.
One of the biggest benefits for us at Camera at
Sydney was when Google Sydney set up shop in Sydney,

(02:05):
and they wouldn't have set up shop if they had
these kind of rules. So this allows for overseas investment
to come in, stay and go, and then it's that
skills transfer from these people to our entrepreners who are
trying to do stuff and scale. There's an opportunity to
consider if we can extend this to everyone, so it

(02:27):
allows more and more FEU to look up and start
investing and playing a global game, which is nearly the
number one thing we have to do to become more productive.
And finally, just set this up with international standards.

Speaker 1 (02:41):
Yes, well, you've talked about how you've come back to
New Zealand and about how other New Zealand entrepreneurs have
come back because you have faith in the country, and
now you've got some rules that are going to help
you as well. But what I want to know is
how common it is for companies to actually leave New
Zealand having done the hard yards, having started up, but
then leave because of the foreign Investment fund rules as

(03:01):
they stand.

Speaker 2 (03:02):
Yeah, so why do why do companies leave? Companies leave
because one they want to get talent from overseas and
two because they want to access capital. Look, the largest
capital market in the world easily and the best is
the US. There are so many Americans who want to
be in New Zealand. So can we get more of

(03:24):
our tech companies staying here for their first four to
five years and once you stay four to five years.
You're you're locked in, right, so will they will there
their chance that they belonging. Yes, an opportunity for the
government to extend things further, and financialist nicols to talk
about this is reducing corporate tax, but not that alone.

(03:45):
Maybe even reduce income from your first over these five
hundred thousand dollars made overseas or something along those lines,
which then trigger entrepreneurs to like, make that overseas dollars
stay here longer.

Speaker 1 (04:00):
I thank you so much for your time today, Mahesh Morerida,
who is Phase one Ventures CEO.

Speaker 2 (04:05):
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