Government Signals Support for Competitive Tax Settings in May Budget

Highlights:

• Corporate tax relief remains under consideration for NZ Budget 2025, but not necessarily via a rate cut.
• Finance Minister Nicola Willis emphasizes the importance of maintaining globally competitive tax settings.
• Final decisions are pending, with the Budget announcement set for May 22.

Corporate tax relief may feature, but no confirmation on rate cuts

New Zealand's Finance Minister Nicola Willis has signalled that corporate tax relief remains a consideration for the upcoming national Budget on May 22, although it may not necessarily involve a reduction in the corporate tax rate.

Speaking at a press briefing ahead of the Budget, Willis emphasized her focus on keeping the country’s tax system competitive. “What I’ve always said is that I’m interested in competitive tax settings,” she said. This comes amid a broader fiscal backdrop complicated by sluggish economic conditions both locally and globally.

Balancing Act Between Growth and Fiscal Discipline

While the government is eager to stimulate economic growth, it is also facing fiscal pressures due to slower revenue growth. As a result, any tax relief measures will likely need to strike a balance between supporting businesses and maintaining the integrity of the public purse.

Willis’s comments suggest the government may explore alternative avenues for corporate relief that don’t directly involve lowering the 28% corporate tax rate—such as targeted incentives or deductions aimed at boosting business investment and productivity.

May 22 Budget Expected to Prioritize Business Confidence

With Budget 2025 just weeks away, the government is likely to unveil policies designed to reassure businesses while navigating a tight fiscal environment. At the time of writing, no official confirmation has been made about specific tax changes, but the ongoing discussion around competitiveness indicates business-friendly measures are still very much under review.

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