The New Zealand government has scrapped a proposed 15% tax on investment management services supplied to managed funds.
This came days after introducing the legislation to parliament, according to law firm DLA Piper.
The Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Bill was tabled by the Minister of Revenue on 30 August 2022.
This included a measure applying the standard 15% rate of goods and services tax (GST) to services supplied directly or indirectly by managers and investment managers to managed funds and retirement schemes. DLA Piper said that the proposal caused a “significant media backlash” because of the resulting increases in the overall costs incurred by managed investment schemes.
On 2 September 2022, the bill was withdrawn. A revised bill omitting the provision was published on 8 September 2022.
The law firm said: “While it is good for investors in that they will not bear the consequences of additional GST, it will be disappointing if the matter is simply dropped.
“The GST treatment of investment management fees needs to be addressed. The lack of clarity in the GST rules and resulting inconsistency in the treatment of GST across the funds management industry is undesirable.”