New double tax agreements with Chile, Poland and Spain, new protocols to Australia and Singapore agreements
2006 Order in Council outlines double tax agreements with Chile, Poland and Spain and new protocols in existing agreements with Australia and Singapore.
Three new double tax agreements (DTAs) between New Zealand and Chile, Poland and Spain have entered into force. Two protocols amending existing double tax agreements with Australia and Singapore have also recently entered into force.
The new DTAs with Chile, Poland and Spain are expected to play an important part in facilitating increased bilateral trade and investment between those countries and New Zealand. They are designed to provide certainty of tax treatment and prevent the double taxation of cross-border transactions. By providing for the exchange of information on tax matters, the agreements will also play a valuable role in preventing tax evasion.
The Protocol to the DTA with Australia updates the exchange of information article and introduces a tax collection article between the two countries, which will help extend Australia's Wine Equalisation Tax rebate to New Zealand wine producers.
The Protocol to the Singapore DTA updates the agreement to resolve certain difficulties over the interpretation of the agreement covering entities providing consultancy services.
New double tax agreements with Chile, Poland and Spain
The agreement with Chile was signed on 10 December 2003 and incorporated into New Zealand law by Order in Council on 21 June 2004. Double tax agreements do not come into force until the necessary legal procedures have been completed in both countries. Those procedures having also been completed in Chile, the agreement came into force on 21 June 2006. The agreement has effect for New Zealand withholding taxes from 1 January 2007 and for other New Zealand taxes for income years beginning on or after 1 April 2007.
The agreement with Poland was signed on 21 April 2005. The agreement with Spain was signed on 28 July 2005. These agreements were incorporated into New Zealand law by Orders in Council made on 26 June 2006. The necessary legal procedures have also been completed in both Poland and Spain. The DTA with Poland therefore came into force on 16 August 2006. It has effect for New Zealand withholding taxes from 1 January 2007 and for other New Zealand taxes for income years beginning on or after 1 April 2007. The agreement with Spain came into force on 31 July 2006 and has effect for New Zealand withholding taxes from 1 September 2006 and for other New Zealand taxes for income years beginning on or after 1 April 2007.
Protocols amending existing double tax agreements with Australia and Singapore
Protocols setting out changes to New Zealand's existing DTAs with Australia and Singapore were signed on 15 November 2005 and 5 September 2005 respectively. Orders in Council incorporating those protocols into New Zealand law were made on 26 June 2006.
The Protocol with Australia updates the Exchange of Information Article in the existing DTA and broadens the application of that Article to all taxes. In addition, an Assistance in Collection of Taxes Article has been added. These changes will assist the extension of Australia's Wine Equalisation Tax Rebate to New Zealand wine producers. The protocol also gives Australia most favoured nation status in respect of withholding taxes on dividends, interest and royalties. The protocol came into force on 22 January 2007 and has effect from that date, except for Article 4, which inserts new Article 27 (Assistance in Collection of Taxes), which will take effect from a later date, to be agreed between Australia and New Zealand.
The Protocol with Singapore updates the existing DTA to cover New Zealand entities providing consultancy services in Singapore and Singapore entities providing those services in New Zealand. It came into force on 17 August 2006 and the changes it introduced apply to income derived on or after 1 January 2006.
The full text of the DTAs and Protocols is available at:
Double Taxation Relief (Republic of Chile) Order 2004 (2004/175), Double Taxation Relief (Poland) Order 2006 (2006/169), Double Taxation Relief (Spain) Order 2006 (2006/170), Double Taxation Relief (Australia) Amendment Order 2006 (2006/171), Double Taxation Relief (Singapore) Amendment Order 2006 (2006/172)