NEW ZEALAND Trends and Developments Contributed by: Greg Neill, Fred Ward and Callum Burnett, Russell McVeagh
Russell McVeagh Level 30, Vero Centre 48 Shortland Street PO Box 8 Auckland 1140 New Zealand
Tel: +64 9 367 8000 Fax: +64 9 367 8163 Email: enquiries@russellmcveagh.com Web: www.russellmcveagh.com
The past year has seen a range of significant develop - ments in New Zealand’s tax landscape. These include a marked increase in Inland Revenue’s audit and enforcement activity, a suite of policy measures aimed at encouraging investment and supporting economic recovery, ongoing domestic tax policy reform across a number of targeted areas and further development in New Zealand’s international tax settings. Audits, Enforcement and Investigations Following significant increases in overall levels of tax debt in the last five years, 2025 marked a notable tightening in New Zealand’s tax compliance environ - ment. Increases in the number of audits, investigations and enforcement actions Inland Revenue have been supported by increased Government investment in Inland Revenue’s enforcement capabilities and a com - mitment from Inland Revenue to intensify compliance action. Budget 2025 delivered an uplift in funding for Inland Revenue, with an additional NZD35 million per annum commitment from the Government alongside the continuation of earlier funding. This investment was directed at increasing Inland Revenue’s audit presence, strengthening its debt collection functions and improving its data and intelligence infrastructure. Together, these measures form part of the Govern - ment’s broader fiscal strategy to improve the integrity of the tax system, minimise compliance costs and support fiscal sustainability. This additional resourcing has translated into a mate - rially more active compliance environment. For the 2024–25 period, Inland Revenue reported a signifi - cant increase in audit activity, with a large focus on New Zealand’s largest businesses. This has resulted in
an additional NZD880.8 million in assessed tax in the year to 31 March 2025. There has also been an uplift in cash collections from overdue debt and student loan repayments – demonstrating the early impact of the strengthened enforcement posture. A notable feature of the evolving enforcement land - scape is Inland Revenue’s increased use of liquidation proceedings as a method of recovering unpaid tax debts. In the year to 31 March 2025, Inland Reve - nue‑initiated liquidations were up 67.5% compared with the same period in the previous year, reflecting a firmer stance towards businesses with outstanding tax liabilities. This trend has coincided with a broader rise in company liquidations in New Zealand – show - ing an approximate 26% year‑on‑year increase. It is expected these trends will continue into the 2026 and 2027 tax years. Government Initiatives to Increase Investment As set out in the Government’s Tax and Social Poli - cy Work Programme, current tax policy settings are being shaped by an objective of supporting economic recovery. In practice, this has involved a focus on tax measures intended to influence taxpayer behaviour, such as incentivising investment, supporting produc - tivity and maintaining New Zealand’s competitiveness as an investment jurisdiction. Reform has generally been targeted, rather than broad-based. Taxation (Annual Rates for 2025-26, Compliance Simplification, and Remedial Measures) Bill A range of investment‑focused initiatives were includ - ed in the recent Taxation (Annual Rates for 2025–26, Compliance Simplification, and Remedial Measures)
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