Doing Business in New Zealand - Essay Example

Doing Business in New Zealand This report illustrates the legal norms and political risks associated with running business in the current New Zealand food industry. The growing healthcare concerns, governmental attitude, and economic stability have become the important factors that determine the business consistency in New Zealand. At this juncture, introducing a new nutrition bar into the market requires a detailed study of the relevant regulations and political risks. Political Risks: Though recovering fast, the economic downturn and high unemployment have tormented the economy to a great extent.

Therefore the hefty borrowing is the major risk the government is facing now. However, political stability in New Zealand is comparatively satisfactory for which it has ranked fifth in the world. The country relies on foreign investment inflows and recently the government has reviewed its tax policies and tariff to enhance a favorable environment for international trade. Therefore, despite certain legal constraints, New Zealand offers comparatively favorable environment to new business entrepreneurs.

New Zealand’s close traditional relationship with Australia has enabled free movement of both goods and labor. The condition is attributed to the political stability and the traditionally competitive economy (NZTC). Legal Implications: The regulations associated with food industry include business income tax laws, food hygiene Regulations, and food packaging regulations. 1. Low tariff has become the major facet of business in New Zealand which commenced since 1980 with the unilateral tariff cuts.

Since, October 2008 a new tariff schedule was introduced which replaced the tariff on industrial products with three ad valorem rates (New Zealand Trade Summary). In the same way, since the introduction of the Closer Economic Relations (CER) Agreement of 1983, the government ceased all duties on goods between New Zealand and Australia (NZTC). 2. Companies in New Zealand pay income tax on their net profit (at 30%) of each financial year which usually runs from 1st April to 31st March. At the end of the financial year the company can file a tax return according to which the payment accuracy is calculated.

In addition, the goods and service tax (1986) insists on 12.5% GST on products or services sold in New Zealand; and business that exceeds its turnover $ 60,000 per annum has to register for GST. However, according to the new regulations, this tariff will change from 12.5% to 15% since 1 October 2010. 3. The food Hygiene Regulations 1974 insists on the hygienic conditions of food handling and registration of food premises with the Local Territorial Authority (Legislation New Zealand). 4. New Zealand Dietary Supplement Regulations that regulate the food supplement standards came into force since 31 March 2010.

According to these standards, it is illegal to use substances which may cause intoxicating effect on a person or negative impact on health. 5. The New Zealand Food Act 1981 section 9 (4) (c) insists on the manufacturers’ responsibility to make sure that materials used for packaging are pollution free; and another regulation that is relevant to the packaged food labeling is the weights and Measures Regulations 1999. (Legislation New Zealand). Works Cited “Buyers-Overview of New Zealand Economy”. NZTC. Web.

http://www.nztc.co.nz/buyers/overview.asp Legislation New Zealand. The World Guide. Web. http://www.lexadin.nl/wlg/legis/nofr/oeur/lxwenzl.htm New Zealand Trade Summary. www.ustr.gov/ Web.