Overseas persons investing in sensitive land to face substantially higher fees
Article date: 2021-08-12The Overseas Investment (Fees) Amendment Regulations 2021 were released today.
The Overseas Investment (Fees) Amendment Regulations 2021 (Fee Amendment Regulations) were released today, following the Overseas Investment Office's (OIO) review of its fee levels and framework in 2020, and a consultation period which ended in March 2021.
The Fee Amendment Regulations come into force on 13 September 2021.
The OIO found in its fee review in 2020 that the cost of operating New Zealand's overseas investment regime was not fully recovered from fees under the current structure, and proposed a series of changes to its fee levels and framework in an effort to better recover costs.
Bell Gully made a detailed submission (available here) on the OIO's proposed fee changes, with our main concerns being that:
Overseas investment brings substantial benefits into New Zealand and is vital to our economy. Accordingly, fee increases should be limited to avoid deterring overseas investment.
Recent streamlining of the application process should result in lower costs to the OIO and, therefore, fee increases should be limited.
Any new fee structure should be straightforward for applicants to apply.
Following the release of the consultation paper, we expected the Fee Amendment Regulations would substantially increase application fees, particularly where the OIO considers an application to be more complex.
In some categories it appears that fee increases have been limited compared to initial proposals. For example, the initial proposal was to charge NZ$86,700 for a “complex" significant business assets (SBA) application. We are pleased to see that there is no longer scope to treat SBA applications as “complex". The resulting fee increase from NZ$32,000 to NZ$38,800 is more appropriate given the recent simplifications to the SBA consent process. However, in other categories, such as sensitive land applications, the fee increases remain substantial and similar to initial proposals.
The fees for applications involving an “interest in sensitive land" and requiring applicants to demonstrate “benefits to New Zealand" currently range from NZ$35,500 to NZ$54,000. Following 13 September 2021, overseas investors will have to pay OIO fees of up to NZ$146,200, depending on the nature of the sensitive land being acquired and the complexity of their corporate structure.
We remain concerned that such fees have the potential to deter beneficial inbound investment to New Zealand.
The Fee Amendment Regulations also shift away from the current system of a single fee for applications for each investment pathway in favour of differentiated fees for:
the lodgement, assessment and monitoring compliance stages of an application, under most investment pathways, and
standard and complex applications for sensitive land applications – with the complexity of an application depending on the complexity of the purchaser's corporate (ownership and control) structure.
While this does better reflect the OIO's processing costs, it does add additional administrative burden for applicants.
Further details of the new OIO fee structure can be found here.
If you have any questions about the matters raised in this article, please get in touch with the contacts listed or your usual Bell Gully advisor.
