New Zealand Offshore Investment Finance Company (NZOFC)

New Zealand legislation enables the creation of an offshore finance company, which providing it is independent of the depositors, can accept global deposits, earn high interest (for example if invested in New Zealand in the range of 7.75% - 10.5% for 12 months) and pay the depositors a lesser interest rate. Instead of the non resident withholding tax rate, only 2% tax is deducted on interest paid to non-residents. This is the “Approved Issuer Levy” scheme where the independent finance company (or any taxpayer) who has complied with their tax obligations, can register as an approved issuer. The financial arrangement must be a security which is registered with the New Zealand Revenue.

An Offshore Finance Company (OFC) can offer banking services to both private individuals and corporations worldwide, with no limitations on number of customers, amounts on deposit or number of currencies.

The OFC can operate in a similar way to a fully licensed bank, but the word “bank” cannot be included in the name. Activities of an OFC can include but are not limited to:

• Deposit taking & lending
• Debit and credit card services
• Issuing of financial guarantees and instruments
• Cash management services
• Current accounts
• Cheque (Checking) accounts
• Savings accounts
• Term deposits
• Wire transfer services
• Payment processing services
• Fund management
• Marketing of investment

The company is not subject to capital reserve requirements. Directors and Shareholders can be of any nationality and resident anywhere (NZ Securities can provide the advice to avoid annual audited accounts being submitted to the Registrar of Companies).

Although the OFC is not subject to Central Bank supervision and regulation, its activities are regulated by several acts. Details can be provided on request.

Alternatively the clients could (with NZ Securities assisting with the local New Zealand administration), invest directly into Government Stock. As an indication (as at September 2007) Government Official Cash Rate (OCR) was 8.25%. Alternatively Trading Banks’ interest rates for one year deposits range up to 7.75% and other non bank deposits such as Finance companies typically range from 8.75% to 10.5%. Again assuming the necessary registrations were in existence, there would be no non-resident withholding tax deducted at source, but instead the minimal 2% levy. If no registrations were in place then the higher non resident withholding tax would be deducted (subject to reductions where double tax agreements are operative between New Zealand and the source jurisdiction).

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