Scaling Mt Export
Expect to lose some digits along the way (start-up losses)
Experience suggests that nearly all companies businesses lose real money in their early first years of overseas operation. As a result, be very careful about overseas business structures that don’t let you offset overseas start-up losses against your company’s New Zealand basedbusiness income. Put simply, for every $100,000 in overseas losses that you can offset against your New Zealand based profit, you save additional cash outlay of $28,000.
Knowing the difference between a porter and a guide
On the mountain a porter carries the bags just as an overseas general accountant will offer sound tax compliance and general business advice. However don’t rely on the porter for your cross-border structuring advice or you and your money will end up over a cliff. A cross-border tax specialist just like a mountain guide will for a fee/investment ensure that you return from Mt Export alive with your money intact.
The common penny- wise pound- foolish practice of taking informal structuring advice from an overseas general accountant always results in tears and the loss of further digits. Know the difference between tax strategy and tax compliance, most New Zealand export businesses don’t and that costs.
The adventure on Mt Export begins and ends at home
It’s a plain fact that most of the tax accidents on Mt Export happen on the return home. Sophisticated companies understand very clearly that New Zealand tax law will only let you off Mt Export if you follow certain sanctioned routes off the mountain. If you don’t follow those routes you get taxed twice, as simple as that. So what does this mean in practice?nearly alwayskeep m
An informed cross-border tax strategy starts with your New Zealand specialist cross-border tax advisor. That advisor will help you select an offshore specialist tax advisor and frame key questions to be answered by that offshore advisor. Through this process a sensible commercial structure can be chosen, one which works both overseas and in New Zealand. Under this approach a fair and reasonable level of taxation of say $250,000 to $300,000 per one million dollars of pre-tax overseas profits may be achieved.
You may be surprised to learn that most companies don’t follow this approach. The alternative approach involves the company owner stepping on a plane and obtaining good overseas tax advice which unfortunately doesn’t mesh with New Zealand tax law and the result is a total tax cost of approximately $550,000 per one million dollars of pre-tax profit. You chose.
The tax strategy and tax thinking needs to be directed from New Zealand.
We live in a country whose primary economic activity is based on Australian banks’ lending to the to domestic property sector. New Zealand really needs you to do well as an exporter and do your bit to grow the economy. When you are successful, there may even be a gong Knighthood in it for you!