One of the major benefits of utilising NZ companies flows from the very fact that the NZ is not a tax haven, not black listed, is a member of the OECD and UN so a NZ based tax planning structure would not generally attract the same level of attention of those based in a pure tax haven country.

A NZ company is incorporated and enters into an agreement with the offshore company. Under that agreement, which is committed to writing and executed by both parties, the NZ company agrees that it will trade on behalf of the offshore company as its nominee. All contracts of purchase and sale, all the invoicing and all the general correspondence will be made in the name of the NZ company and the NZ company receives all the revenues from such business as nominee for the offshore principal. The agreement should state that all monies received are received as nominee for the principal save insofar as there will be an agreed fee which will be retained by the NZ company. That fee may either be expressed as a flat fee for all the trading done on an annual basis (sufficient to cover the minimal costs) or, expressed as a percentage of the gross revenues received. The standard form is that 5 or 10% of the invoice total in respect of each transaction is retained by way of fee by the NZ company.

In order to protect the trading profits from NZ taxation it is essential that no trading activity must occur within NZ. What constitutes NZ trading activity would be construed by reference to the normal indicia such as the place where the contracts of sale are executed. and the place of acceptance of an offer made outside NZ. The offshore company must of course be non-resident in NZ for tax purposes itself. This means that its central management and control must reside outside of NZ.

The nominee fees received by the NZ company will of course be liable to taxation insofar as they generate a profit for the NZ company.

One solution to the problem of common control is that the NZ company should be beneficially owned by a third person (our nominee). If the client has doubts as to the safety of such an arrangement he should realise that the contract between the two companies is enforceable and that in any event the vast majority of monies will be immediately passed over to the offshore company. However, even when there is common control between the two companies, provided a commercially viable relationship exists between the two companies and the rate of fee retained by the NZ company is in line with what might be expected of an arms-length transaction. There is no reason why the inland revenue might make a direction adjusting the NZ company's deemed remuneration.