Company tax rate falls from 1 April

An important initiative in the government’s on-going programme to strengthen the economy takes effect tomorrow when the company tax rate drops to 30 per cent, Finance Minister Michael Cullen and Revenue Minister Peter Dunne said today. 

“Reducing the company tax rate will allow successful businesses to re-invest a greater share of their profits in new technologies and in further building-up the skill base of employees,” Dr Cullen said.

“We expect that lowering of the company tax rate will serve to strengthen the competitiveness of New Zealand-based companies, and that is good for the long-term interests of all New Zealanders,” Peter Dunne said.

The cut to the company tax rate to 30 per cent, from 33 per cent previously, is the first time the company tax rate has been reduced in New Zealand since 1988.

Dr Cullen said that the latest initiative is part of the Labour-led government’s economic transformation package that includes the significant moves on depreciation and other business tax measures announced in 2005, tax credits for R&D and changes to the tax treatment of savings vehicles.

The changes arise from the Business Tax Review carried out as part of the confidence and supply agreements between Labour and UnitedFuture and between Labour and New Zealand First.

The Labour-led government has so far cut taxes by around $4.5 billion a year, with benefits targeted at businesses, families with children and personal savings .