New Zealand’s business sector is confronting rising difficulties as unpaid GST (Goods and Services Tax) and PAYE (Pay As You Earn) debts exceed $1.4 billion for the 2025 financial year. This growing fiscal burden reveals economic strain and could have far-reaching effects.
Inland Revenue data shows unpaid taxes have risen steadily since 2018, with nearly $48 million still owed from that year and $1.471 billion outstanding for 2025. Around $433 million relates to employer payroll obligations, and over $1 billion to GST. More than $66 million is tied to businesses or individuals now in liquidation or bankruptcy, making recovery unlikely.
The construction sector has the largest unpaid sum, nearing $1 billion over recent years, followed by rental, hiring, and real estate services at $534 million. On a per-business basis, utility companies hold the highest debts, indicating particular financial stress in capital-heavy industries.
This increase in tax debt reflects global trends linked to ongoing economic challenges post-pandemic. Tony Morris from Inland Revenue notes a rise in companies accumulating debt that might previously have failed during Covid-19. Economists warn this creates a damaging cycle, where unpaid GST and PAYE signal and exacerbate insolvency risks.
In response, Inland Revenue, with an additional $35 million in funding, has intensified enforcement, targeting high-risk sectors and initiating more liquidations. This approach aims to maintain fairness, preventing “zombie” companies from gaining advantage by withholding tax owed to the government and employees.
When Inland Revenue liquidates companies for tax arrears, it is first in line for repayments, often leaving other creditors with losses. Company directors also face legal risks if they neglect tax payments or trade while insolvent.
Although Inland Revenue has written off over $560 million in uncollectable tax since 2018, write-offs have decreased recently as enforcement tightens. Businesses are urged to manage tax compliance carefully, seek advice early, and reassess viability to avoid escalating debts.
Looking forward, increased scrutiny and action on tax arrears are expected. Inland Revenue’s focus is to ensure a fair environment for compliant businesses, though the rise in liquidations indicates ongoing economic challenges for New Zealand’s commercial industry.