The corporate bond market and impact of AIL and NRWTTax Alert - October 2009 |
New Zealand’s corporate bond market has recently experienced strong growth with the total value of corporate bonds on issue increasing since 2005 from $12 billion dollars to $23 billion dollars today. It is said that a well-functioning bond market has a number of important signalling and support roles which affect the performance of the wider financial system. However there is concern that the current approved issuer levy [AIL] and non-resident withholding tax [NRWT] rules may hinder further development of this market because AIL and NRWT increase the cost of issuing bonds to non-residents. In response, Inland Revenue Officials have released an issues paper to canvass thoughts on the design of a possible exemption on interest paid on corporate bonds that meet certain criteria. Submissions, which close on 30 October 2009, are sought on the extent to which AIL affects bond issuance and the way that businesses raise funds, relative to other factors. For more information on the detail of suggested changes please contact your usual Deloitte Tax advisor.