Onshore Or Offshore Investment in New Zealand – Biotech Versus an NZOFC
New Zealand is an English speaking, democratic country of the British Commonwealth. It has a free market economy, political stability, a first rate educational system, and strong research, business, and entrepreneurial communities. New Zealand offers the foreign investor the opportunity for attractive investments onshore and a legal vehicle for operating a New Zealand offshore financial company, an NZOFC, on its shores. Onshore investments in New Zealand may deal locally or tie into New Zealand’s healthy export economy. Offshore investments in New Zealand will take advantage of business opportunities and what are essentially banking clients throughout the globe, but not in country.
New Zealand is located in the South and Western Pacific Ocean on two large islands. The majority of New Zealand’s inhabitants are of European descent and the most commonly spoken language by far is English. It is a developed country with high international rankings in economic freedom, lack of corruption, and education. International surveys of the world’s most livable cities always see New Zealand’s urban areas at or near the top of the list. Its British Empire heritage is still in evidence by the fact that its head of state is Elizabeth II, the queen of England. The queen is represented by the Governor-General but administrative power is in the hands of the Cabinet of New Zealand.
New Zealandis well known in the business world for having a culture of innovation and a stable political environment, especially as relates to doing business. New Zealand consistently ranks high in surveys on ease of doing business. The various factors combine to make New Zealand a great place to invest. Specifically there are a number of business areas for which New Zealand stands out. These are biotechnology and agricultural technology, creative activities such as digital and creative arts, design fashion, publishing, textiles and digital content.
Specialized manufacturing thrives in New Zealand with businesses specializing in clean technology, defense, both light and heavy engineering, plastics, composites, and metals technologies. Much of this derives from the country’s strong educational and research base.
An economic strength of New Zealand is its food and beverage industry that tripled its exports in the last two decades. Its technical strength shows in its computer and software industry. New Zealand deals in wireless infrastructure, health informational technology, transport, logistics, and supply chain management technology, and communications technology with geospatial applications.
With a healthy environment and large forests New Zealand has a thriving export business in lumber and other forest products. The other aspect of New Zealand’s healthy environment and natural beauty is that the country is a tourist destination that attracts over two million visitors a year and billions of tourist dollars.
During the wave of deregulation that swept many developed countries during the 1980’s New Zealand developed consultancy services to help the commercial and social environment adapt. These consultancy services are especially helpful for those wishing to invest onshore in New Zealand of establish and offshore business licensed and based there. Whether it is investing in world class biotechnical research aimed at genomics, reproduction, cloning, or molecular techniques aimed at enhancing animal productivity there is a home grown industry in New Zealand ready to help the interested investor.
For those interested in doing business internationally but with New Zealand as a base there is one especially attractive option. It is the bank that is not a bank. This is a New Zealand Offshore Financial Company, an NZOFC. This sort of operation can take interest bearing deposits, make loans, offer credit and debit card services, provide trust services, and much more. An NZOFC can effectively function as an offshore bank. However, it cannot do business in New Zealand. Also, because it is governed under a different set of laws than banks it cannot be referred to as a bank. An attractive aspect of an NZOFC is that it does not have any capital requirements and is not subject to New Zealand Central Bank regulation.
A useful bit of information for investors is that companies doing business in New Zealand are commonly taxed. A New Zealand Special Purpose Company which is an offshore company, however, can be set up to be the trustee of a non-resident New Zealand trust. This sort of offshore business arrangement is not taxable in New Zealand except in so far as any income is gained in the country of New Zealand.
As with many offshore company setups an international business company out of New Zealand will typically do business throughout the world, hold bank accounts, and invest anywhere outside of New Zealand. Such a business will be a tax free offshore company.
Once incorporated, the company is generally free to do business, open bank accounts, or invest anywhere in the world. If a company wishes to take advantage of the sort of asset protection features often available offshore the coupling of the business with a trust is helpful.
If an investor is interested in the bank that is not a bank, namely a New Zealand Offshore Financial Company, such an institution can be licensed and formed by anyone irrespective of nationality. The principals need not be resident in New Zealand although it is not uncommon for an NZOFC to have at least one shareholder, officer, or manager who is a New Zealand resident only because there may be, at times, issues that are more easily handled by someone physically present in the country.
When investing in New Zealand or choosing to license an offshore company in New Zealand the investor will typically wish to look at what business opportunities are available onshore as well as offshore. To the degree that tax advantages or the asset protection and privacy features of an offshore business are important the principals of a business may well choose a complete “offshore” route. To the degree that business opportunity in the country of New Zealand is attractive the principals will be able to seek advice on investment opportunities onshore instead of offshore.