New Zealand needs talented people who want to found, manage, advise, mentor and grow local companies that can be successful without having to produce at scale, close to markets. Globally, firms are facing increasing competition for skilled people, placing a premium on those prepared to leave home to pursue their lives overseas. 

New Zealand has the right policies in place to attract talented people to come here. The authors argue one reason more immigrants are not arriving and staying is the international tax regime was not designed to reward global success.

When introduced in the late 1980s and 1990s, the international tax regime – especially the Foreign Investment Fund (FIF) rules – had two purposes. The first was to limit the ability of New Zealand taxpayers to use tax havens to reduce their domestic tax liabilities. The second was removing tax-driven incentives to invest offshore rather than at home. The idea that highly talented people with ideas and capital who already had overseas investments might want to come to New Zealand and contribute economically was not top of mind when the FIF regime was introduced.

The authors argue FIF rules impose a tax burden and reform of the FIF rules is required and urgent. They recommend that the government aim to develop principle-based solutions that can be enacted by the start of the 2025 income tax year.