Marcus Beveridge: Queen City Law Managing Director on the foreign investment changes

There's frustration over the Government's lack of pace in changes to encourage foreign investment. 

It's set aside $65 million over four years to loosen the capitalisation rules for investors. 

The change will allow foreign-owned companies to fund a bigger chunk of their investments in New Zealand through tax deductible debt. 

Queen City Law managing director Marcus Beveridge says told Mike Hosking the Government's still trying to get rid of roadblocks. 

He says it's underwhelming to be a year and a half through an election cycle and to still be tweaking things in this space. 

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Episode Transcript

Speaker 1 (00:00):
Some more new tax treatment out of Thursday's budget to
help business. Foreign owned businesses, we'll be able to fund
a bigger chunk of their investments here through tax deductible debt.
There's also a tax treatment tweak on employee share schemes,
Queen city laws. Marcus Beverage specializes and all this sort
of thing, and he's with us, Marcus morning to you,
what do you make money? Small numbers doesn't change. Does

(00:20):
it move the needle? Or are we just a bit
grateful for doing anything?

Speaker 2 (00:25):
A bit of both. I think it's signals that we're
very much open for business, and it's sort of go west,
young man, and there's golden them beyonder hills. And we
want to encourage foreign investment and get some of the
big infrastructure projects moving. And to do that we're saying
yes makes Essentially, with the thin capitals, you can set
up holding company offshore and have a debt between the

(00:49):
companies and therefore make less profit in New Zealand. So
we're saying, yes, we'll bend over, We'll let you make
less profit here, but please bring your funds in.

Speaker 1 (00:57):
Does everybody do this globally?

Speaker 2 (01:01):
I'm not one hundred percent sure about that, but it's
generally they're based. The thin cap rules are harmonized between
most Western jurisdictions. There is a bit of a catch
me if you can, mentality in parts of Asia compared
to the compliant sort of companies out of more of
the Anglo Saxon jurisdictions. But yeah, it's always been there.

(01:26):
It's a legitimate way of lessening the text burden, similar
to the film stuff that they've done recently. So we're saying,
come in, we'll let you pay this tax. So obviously
the government's listening to the top end of town.

Speaker 1 (01:41):
The startup thing, I'm assuming it's for startups. You give
me a slice of the action instead of paying me
because you haven't got any cash. Is that a big deal?
Will that mean more startups or just easier for those
who already started up?

Speaker 2 (01:54):
That's more to do it. Like with the employees, we
won't wake you for the tax that you've made for
you for your big payout. So it's a bit like
the business migration. I mean, that's the good news. At
the moment. We've had six hundred mem then committed here
in one month, and that could extrapolate that out over
a year, it's over six billion dollars worth of money
coming in for those people. Of course, they don't need
to be tax residents of New Zealand unlike the USA folk,

(02:18):
and they actually get a four year grace period on
their worldwide tax income. So that's just saying it's like
the changes to the fire for rules. If you haven't
actually realized any profit, you haven't sold anything, so you've
only got paper money, we won't tax you on.

Speaker 1 (02:33):
That makes perfect sense. I've started in the Prime Minister
yesterday about the Golden Visa and the foreign Are we
pulling all the levers here, Marcus? Are we doing all
we reasonably we can to get our act together.

Speaker 2 (02:44):
Well, we're trying to get rid of roadblocks. We're halfway
through this term. To me, it's sort of underwhelming, and
you know, once it needs to get out of the
way and we need to really fire up and get
rid of roadblocks. So that's sort of where the rubber
hits the road. It really makes and I think, to me,
it's underwhelming to be a year and a half through,

(03:04):
you know, election cycle, to kind of be tweaking stuff
at this stage. I think they could have done a
lot better, like our friend Donald Trump, you know, issuing
edicts from day one, this has been cumbersome and slow.

Speaker 1 (03:16):
Doge to the place, Marcus, appreciate your insight. Marcus beveragequen
City Law Managing Director. As I've said a million times
on this program, that's the sort of view I get
a lot from business in this country. And when the
planners were sitting on this program, in this very studio
yesterday saying we're a new government, I said, no, you're not.
You're a year and a half in and we could
have done so much more.

Speaker 2 (03:32):
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Speaker 1 (03:36):
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