Banks
Your bank will be an essential partner as you grow your export business providing a range of specialised financial products and services.
Services banks provide include:
- trade finance
- insurance
- facilitating payment.
Banks can also be a useful source of advice for matters such as insurance, exchange rates and financing matters.
Export credit
Your ability to offer credit or flexible payment terms can make it easier to make a sale in an overseas country. However, such deals can put a strain on your cashflow or have a harmful impact on your business if the overseas buyer defaults on payment.
Your bank can offer a range of financial services to help manage your export credit risks. In addition the New Zealand Export Credit Office (the officially supported export credit agency for New Zealand) offers export credit insurance guaranteeing payment if your buyer defaults. This complements insurance products offered in the commercial market.
Find out more about Export Credit Insurance from the New Zealand Export Credit Office (NZECO).
Tax
If you are resident in New Zealand your worldwide income will be liable for business income tax in New Zealand.
As an exporter, you may be classified as a tax resident both in New Zealand and another country, and could be taxed twice on the same income.
However, New Zealand has a number of double tax agreements (DTAs) with other countries. These determine which country has the first or sole right to tax specific types of income.
Find out more about double tax agreements from the IRD.
If you set up a separate offshore company there are rules on transfer pricing. It’s a good idea to have documentation relating to transactions between related entities to prove that the transactions were conducted at ‘arm’s length’.
Find out more about transfer pricing from the IRD.
Tax matters can be complicated. It is important to find out about your tax obligations from your accountant or business advisor.
Goods and Services Tax (GST)
Exported goods qualify for ‘zero-rating’ for GST. Some services you supply overseas may also be eligible for zero-rating for GST.
Find our more about zero-weighted supplies (GST on exempt, zero rated and special supplies) from the IRD.
Repatriation of profits
Returning profits to New Zealand from your foreign subsidiary may not be as straightforward as you think. Seek professional advice on the financial repatriation polices of different countries and the most tax efficient methods of repatriating profits.
Export conditions of contract
When drawing up terms of trade to cover an export contract, issues to consider include:
- price
- payment terms
- shipping terms
- insurance and liability
- warranty
- intellectual property
- territorial and market restrictions.
Think about issues specific to your company and get input from your marketing, operational and financial executives.
Credit applications
You do not need to give every export customer credit. As in New Zealand, it is important to conduct extensive credit checks on new customers and possibly request payment in advance until a level of trust is created.
Seek legal advice when drawing up credit applications and credit agreements as each country will have differing laws relating to credit.
