New Zealand company tax rate: What every business owner should know
New Zealand's company tax rate is a flat 28% on profit. Here's how it's worked out, paid, and filed.
Written by Naomi Lai— Small business & finance writer. Read Naomi's full bio
Published Friday 30 October 2026
Table of contents
Key takeaways
- New Zealand companies pay a flat 28% tax on their taxable profit, with no tiers or income thresholds.
- You usually pay through the year in instalments as provisional tax, then square up any difference with terminal tax after year end.
- Imputation credits let your company pass the 28% it has already paid on to shareholders, so profit isn't taxed twice when you pay dividends.
- Sole traders and partnerships are taxed at individual rates of up to 39%, not the flat 28% company rate.
What is the New Zealand company tax rate?
The New Zealand company tax rate is a flat 28% on taxable profit. Every company pays the same rate, whatever its size or income, so it's easy to plan around.
A few entities sit outside this standard rate. Māori authorities, for example, are taxed at 17.5%, and sole traders pay the progressive tax rate for individuals. For an ordinary limited company, though, the figure you need is 28%. See Inland Revenue's table of business tax rates for details.
How your company tax is worked out
Your company pays tax on its taxable profit rather than its total sales. Taxable profit is your income for the year minus the expenses you're allowed to claim.
Common deductible expenses include:
- wages and salaries you pay your team
- rent, power, and other premises costs
- stock, materials, and supplier invoices
- vehicle, travel, and other running costs tied to earning income
Once you know your taxable profit, the maths is straightforward. A company with $120,000 of taxable profit pays $33,600 in tax, which is 28% of $120,000. The standard tax year runs from 1 April to 31 March, so those figures cover a full 12 months of trading.
Keeping your income and expenses recorded as you go keeps that calculation honest. When your figures are current, working out what you owe becomes a quick check rather than a year-end scramble.
Paying provisional tax during the year
Rather than paying your whole tax bill in one go, small business owners usually pay provisional tax in instalments through the year. This spreads the cost so year-end is less of a shock.
You'll generally pay provisional tax if your residual income tax for the previous year was more than $5,000. Under the standard method, your instalments are based on 105% of last year's tax, split into three payments during the year. Inland Revenue sets out each standard option for calculating provisional tax in more detail.
If the standard method doesn't fit how your business trades, you can use the estimation, ratio, or accounting income method (AIM) options instead. Estimation suits businesses expecting a very different result from last year, while AIM lets you pay based on real-time profit through your accounting software.
After the financial year ends, terminal tax squares up the gap between what you paid and what you actually owe. IRD has more information about the rules on paying provisional tax. In your company's first year you won't have a prior bill to base instalments on. Provisional tax usually starts once you cross the $5,000 threshold.
Imputation credits: How dividends are taxed
When your company pays tax, it builds up imputation credits. These credits let you pass on the tax already paid at the company level to shareholders when you pay a dividend. The same profit isn't taxed twice.
Here's how it works in practice:
- Your company pays 28% tax on its profit.
- When you pay a dividend, you can attach imputation credits up to a maximum ratio of 28/72 of the cash amount.
- Shareholders include the dividend in their own income and use the credit against their personal tax.
- Shareholders on a personal rate above 28% top up the difference, while those below may get a refund.
You keep track of all this in an imputation credit account. It records how much tax has been paid and how much credit can be passed on. Inland Revenue sets out the detail of how an imputation credit account is maintained.
Filing your company income tax return
Each year your company files an income tax return called the IR4. Alongside it you'll usually provide a summary of your income and expenses on the IR10.
If you file yourself with a standard 31 March balance date, your return is generally due by 7 July. Using a registered tax agent extends that deadline, commonly to the following 31 March, which gives you more room to get everything in order. You can read the current steps for completing and lodging an IR4 return before your balance date.
The return sets out your income, expenses, and the tax due on your profit for the year. Filing on time keeps your company in good standing and avoids late-filing penalties and interest from Inland Revenue.
Company tax vs other taxes you may pay
Company income tax is charged only on your profit, and it's separate from the other taxes your business might handle. Mixing them up is a common source of confusion, so it helps to keep each one in its own box.
- GST is charged at 15% on most goods and services and is reported separately from income tax.
- PAYE is deducted from your employees' wages if you have staff on payroll.
- Sole traders and partnerships pay individual income tax rates of up to 39%, not the flat 28% company rate.
So the 28% rate is specific to companies. If you trade as a sole trader or partnership now, your profit follows the personal rates instead. That's worth weighing up if you're deciding on a structure for a growing business. The right choice depends on your profit, how much you draw personally, and your longer-term plans.
Simplify company tax time with Xero
Keeping clean, up-to-date records in Xero through the year makes working out your 28% company tax far less stressful. Good accounting software tracks your income and expenses as you go, so your taxable profit is ready when your return is due.
FAQs on the New Zealand company tax rate
Here are quick answers to questions business owners might ask about the New Zealand company tax rate.
Is the company tax rate the same for every New Zealand company?
Yes, the 28% rate is flat and applies to all standard companies, whatever their size or profit. Māori authorities are the main exception, taxed at 17.5%.
Do sole traders pay the 28% company tax rate?
No, sole traders and partnerships are taxed at individual income tax rates, which reach up to 39%. The flat 28% rate applies only to companies.
Is company tax the same as GST?
No, GST is a separate tax of 15% on most goods and services, while company income tax applies only to your profit. You can be registered for both at the same time.
When do you have to pay provisional tax?
You generally pay provisional tax when your residual income tax for the previous year is more than $5,000. It's paid in instalments during the current year rather than as one lump sum.
Can you reduce your company tax bill legally?
Claiming every expense you're genuinely entitled to lowers your taxable profit, which is the figure the 28% rate applies to. Keeping accurate records through the year makes those claims easier to support.
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