Govt’s Refreshed Tax and Social Policy Agenda Targets Growth and Simplicity

New Zealand's tax system is set for a new wave of reform aimed at boosting investment, simplifying compliance, and supporting small businesses, with the release of a refreshed Tax and Social Policy Work Programme announced today by Revenue Minister Simon Watts.

The updated framework reflects the Government's economic focus on attracting global capital and talent, reducing red tape, and ensuring the tax system is both fair and conducive to long-term growth.

Building on Momentum for a Stronger Economy

Minister Watts said the refreshed programme expands on the initial tax and social policy plan unveiled last year, which prioritised productivity, skills, and capital inflows.

"Our refreshed work programme builds on that momentum," he said. "It's about removing regulatory barriers and delivering a stable, predictable tax environment that directly supports growth and opportunity. The key to a thriving economy is simplicity, consistency, and competitiveness — this programme delivers on all three."

The updated work plan is structured around four central pillars:

1. Attracting and retaining capital and talent

2. Supporting small businesses

3. Simplifying the tax system and improving integrity

4. Enhancing social policy outcomes

Attracting Global Capital and High-Value Talent

To strengthen New Zealand's competitiveness for global investment, the Government is launching targeted consultations on refined thin-capitalisation rules — regulations that limit the amount of debt a foreign-owned company can use for funding New Zealand operations.

"We are removing barriers that currently discourage large-scale infrastructure investment," said Watts. "Our goal is to encourage productive, long-term capital to flow into New Zealand — particularly into essential infrastructure and innovation."

The Government is also reviewing the Foreign Investment Fund (FIF) regime and financial arrangement rules. These reforms aim to ensure that international workers and returning New Zealanders are not unintentionally penalised by complex tax rules, helping to attract and retain top talent.

"These changes will make our settings more modern, competitive, and fair, and they ensure that investors see New Zealand as a place where innovation and enterprise can thrive," Watts added.

Making Life Easier for Small Businesses

Small and medium-sized enterprises (SMEs) are a core focus of the refreshed plan. The Government will continue simplifying Fringe Benefit Tax (FBT) rules — a long-standing concern for small employers — subject to fiscal constraints.

Additionally, Goods and Services Tax (GST) improvements are being explored to make compliance easier and reduce administrative burdens.

Inland Revenue (IR) is also working closely with tax intermediaries and industry representatives to reduce compliance costs and streamline income tax payments. A consultation planned for early next year will explore a more flexible income-tax payment system for sole traders and small business owners, potentially offering greater cash flow stability and administrative simplicity.

"The Government understands that small businesses are the backbone of the New Zealand economy," said Watts. "Our goal is to make it easier for them to hire, invest, and grow without being weighed down by unnecessary complexity."

Simplifying and Strengthening the Tax System

A major theme of the refreshed programme is improving system integrity — ensuring that tax policy remains transparent, fair, and up to date.

This includes ongoing work on:

• Taxation of charities and not-for-profits, to ensure sector fairness while maintaining social good incentives.

• Inland Revenue's compliance programme, strengthening enforcement against avoidance and ensuring all taxpayers contribute their fair share.

• Legislative modernisation, keeping tax law responsive to digitalisation, new financial instruments, and changing global tax standards.

"In a modern economy, our tax rules must keep pace with innovation," said Watts. "We're focused on ensuring legislation remains robust and fit for purpose, while avoiding unnecessary burdens on taxpayers."

Aligning Tax Policy with Social Outcomes

The fourth pillar of the programme addresses the intersection of tax and social policy. Inland Revenue and the Ministry of Social Development will collaborate on refining tax-related social support mechanisms to ensure fairness and effective delivery.

This may include improving how Working for Families tax credits and student loan repayments are administered, ensuring systems are simpler and more equitable.

A Predictable and Growth-Focused Tax Environment

Watts emphasised that the Government's broader approach is about targeted, practical reforms rather than sweeping tax overhauls. "We're getting on with the job — listening to stakeholders, removing barriers, and focusing on what will make a tangible difference to growth, investment, and opportunity for every New Zealander," he said.

The refreshed work programme reflects a wider economic narrative of restoring business confidence, encouraging international investment, and ensuring that the tax system supports — rather than hinders — innovation and prosperity.

By committing to predictability, simplicity, and fairness, the Government hopes to create a tax framework that not only attracts global investors but also empowers local entrepreneurs to thrive.

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