A New Zealand Offshore Financial Company Part II
A New Zealand Offshore Financial Company Part II
Use of a New Zealand Foreign Trust
There are a number of ways to delay payment of taxes. One is to own the entire NZOFC through a New Zealand Foreign Trust. Typically the trust need not have a New Zealand director. There is a level of confidentiality here that many will appreciate. Taxes eventually need to be paid somewhere but the use of appropriate offshore vehicles in tax advantaged jurisdictions can help substantially in dealing with the 33% corporate tax and 2% issuer levy tax in paid interest of a NZOFC.
Using the Word Bank in the Company Name
Basically the investor does not want to do this as the requirements to notify potential customers that the company is, in fact, not a bank can become cumbersome to the point of driving away potential business. And, it just is not necessary.
Acting as a Bank
Despite never uttering the word "bank," a NZOFC can offer mortgages and other banking activities, just like a bank or savings and loan. New Zealand does not have licenses for banking activities. Its unique structure for allowing bank operation is part of why the country offers the opportunity for a foreign individual or corporation to set up a NZOFC and operate offshore with the correspondent support of local banks. Operating as a registered bank within New Zealand has an entirely different set of requirements and paperwork.
Managing a NZOFC from an offshore jurisdiction will require that the individual or company look into the laws of the jurisdiction. Typically working as an offshore entity from another offshore jurisdiction will work more efficiently that working from the individual or corporation's country of origin. Typically companies may do back office and administrative work elsewhere but will make clear to customers that the business is located in and funds are held in New Zealand.
The office setup in New Zealand can consist of a mailing address, fax, and telephone which can forward to any place in the world. It may be wise to have a compliance officer and director located in country for reasons noted above. This and other management issues should be discussed when setting up the business.
The amount of capital required for a NZOFC will depend upon the amount of business it has. There is not minimum requirement as the NZOFC is not a bank. Although the NZOFC may well find it easier to bank in New Zealand this is not a requirement. The company may have any number of bank accounts in as many jurisdictions as it wishes. The problem noted at the beginning of this article is that due to restrictions imposed by the US Patriot Act such relationships with other banks may be difficult to set up and maintain. However, simply banking elsewhere is typically not a problem.
As with banking there are no restrictions on which credit card issuer a NZOFC need do business with. The company will be free to deal with whom ever offers the best rates, has the best software, and offers the best service to the company and to its customers.
A NZOFC may also own other companies, hold shares in other companies, and engage in a number of business relationships, uninhibited by New Zealand law.
Costs
Setting up a New Zealand Offshore Financial Company entails no capital requirement. A typical startup cost including all application fees will typically run around $27,000 and annual costs including license renew will usually run to around $12,500. These costs are fairly typical for an offshore entity. They are surprisingly low considering the substantial benefits a NZOFC offers.
Withdrawals
Most typically depositor will use a debit card for withdrawals. It is possible to use checks but most commonly a consenting New Zealand bank will need to be used to clear checks. Other options include use of SWIFT transfers. If a client wishes to make a substantial withdrawal the company will typically just wire the money to them, minus fees. This is a more efficient means of withdrawal than checking as checking, even with a local bank's support, will often take well over a month for the check to clear.
Types of Offshore Options for a NZOFC
There are numerous ways to set up a NZOFC to take advantage of the whole range of offshore options available. As working offshore can provide enhanced asset protection and privacy features it may be wise to consider the options when setting up in New Zealand.
One such very attractive option is to set up a New Zealand Special Purpose company to act as a trustee for a New Zealand trust. Then the trust will own the NZOFC. The trust can be administered by nominee shareholders and a New Zealand director plus any others required. In this scenario the trust holds all stock shares and the beneficiaries of the trust are the individuals and corporations wishing to profit from the undertaking.
Although this sort of setup may seem complicated at first the steps are all basic and all covered it the typical setup cost of around $27,000. It is important to note that first year fees are not for a calendar year. They are paid for the remainder of the year up until December 31. Thus a company looking to set up operations late in the year may want to defer starting up until after January 1. All subsequent years are January 1 to December 31.
Typical setup services that investor take advantage of include private label debit and credit cards and scalable banking software as well as ongoing services to guarantee compliance with pertinent laws and regulations, accountant help for tax purposes, help with getting approved issuer status allowing the company to offer term deposits and savings accounts, help with setting VOIP call forwarding services and help with outsourcing other business operations.
Depending upon how much work a company wishes to keep in house and how much it wishes to outsource a NZOFC can work entirely offshore from New Zealand with only a legal presence or it can maintain a physical presence as well. The choices will have to do with efficiency and profitability of the undertaking.
Use of Nominee Services
Those wishing to use nominee services to increase the degree of privacy and asset protection offered by a NZOFC should inquire early in discussions to set up a NZOFC. How this is done will depend up the investor's wishes and should be set up in a timely manner. The use of nominee services will typically be an extra cost for setting up operations.
Listing of Services Fees
It is always wise in setting up an offshore business to ask for a list of services and fees up front. This should not only include direct services by the company helping set up the operation and application and licensing fees. It should include the cost of recommended, ongoing services necessary to the success of the business. For example, knowing how much a dedicated, private fax line and telephone connected by VOIP will cost to set up and operate will be simply part of good accounting of costs. If the company wishes to outsource web page design and maintenance this cost should be considered up front along with cost of setting up nominee services and the like. Asking about and detailing costs up front is simply good business practice and will offend no one.
How to Start
Contact competent counsel in setting up a NZOFC and other offshore entities and send an email or make a phone call. It is that simple. The process may seem complicated but the professionals who help set up the business will have done it many times before. As noted above a typical time frame is about a month from starting to the process to having a business ready to operate. An email confirmation typically can start the process and money can be wired by a SWIFT bank transfer.
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