NZTech supports R&D tax credit scheme but concerned about complex issues

Statistics NZ data shows computer services and scientific and tech services make up 35 percent of all R&D investment.

New Zealand tech organizations, through NZTech, are happy to see the government continuing to improve and evolve the recently launched research and development tax credit scheme.

NZTech chief executive Graeme Muller says they have been supportive of the tax credit scheme but concerned that there were still complex issues such as pre-profit access that needed to be addressed.

“The government promised to continue to evolve the scheme so the announcement of details that provide some pre-profit firms with access is a great step in the right direction, Muller says.

“All Kiwi tech businesses know how critical research and development is for their success and for our country’s economic growth. After all, tech is the fastest growing industry.

“It is clear that the intent is positively focused on ensuring our fastest growing hi-tech and software sectors can access the tax credits system to help encourage them to invest further in R&D.

“There are still a few complex issues that need further discussion such as the definition of software development and we are pleased the Minister is keen to continue working with the sector to maximize the impact of the tax credit system for New Zealand’s prosperous growth,” Muller says.

Statistics NZ data shows computer services and scientific and tech services make up 35 percent of all R&D investment. Computer services companies alone invested $586 million in R&D in 2018, an increase of $150 million.

The tech sector is made up of more than 20,000 firms, most of them small businesses, yet they contribute around $16 billion to GDP and close to $7 billion in exports, making them the country’s third largest export sector.

The growth of the tech sector is contributing to regional growth and employment, with well over 100,000 Kiwis now employed by tech firms. However, the biggest impact from a growing tech sector is the positive impact of its growth on the economy as a whole.

New Zealand has a growing number of successful software firms like Xero, Pushpay, FarmIQ and Soul Machines who continue to spend significant amounts on R&D as their products need constant development, Muller says.