Tax changes might force GPG to leave New Zealand

Sir Ron Brierley's Guinness Peat Group yesterday warned that new proposals for the taxation of overseas investments might force it to leave New Zealand.

Executive director Tony Gibbs said many of its 29,000 New Zealand shareholders, particularly large investors, would face bigger tax bills if the proposals were accepted.

That would make GPG's shares much less attractive to New Zealand investors and could force a reorganisation of the company.

GPG has been caught on the wrong side of the proposals because its head office is in London.

Gibbs wants an exemption on the grounds (among others) that almost 80 per cent of the shares are held through the New Zealand share register.

However, the request has so far been rejected.

"I find it hard to believe that Government is trying to drive GPG out of New Zealand," Gibbs said, adding that Brierley had described the plans as "absolute madness".

GPG says the proposals are a "double whammy" because they also make New Zealand and Australian shares more attractive relative to shares in other jurisdictions.

In a letter to Finance Minister Michael Cullen and Revenue Minister Peter Dunne, Gibbs said: "This ... may well lead to New Zealand institutional investors leaving GPG in droves. The subsequent effect on the share price could be catastrophic."

A spokesman for Cullen said that as most of GPG's shareholders were small investors they would be unaffected by the proposals.