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Are tax sparing disclosures still required?

QB (2010) clarifies that taxpayers claiming a foreign tax credit relating to a tax sparing arrangement under a DTA must file a Tax Sparing Disclosure return.

Some New Zealand double taxation agreements allow a taxpayer to claim a domestic credit for tax which the agreement deems to have been paid in the other country. New Zealand has, or has had, tax sparing arrangements with the following countries:

  • China
  • Fiji
  • India
  • Republic of Korea
  • Malaysia
  • Philippines (terminated)
  • Singapore
  • Thailand (terminated).

A taxpayer who has claimed a foreign tax credit in respect of a tax sparing arrangement under a double taxation agreement must file a Tax sparing disclosure return (IR 486). A separate disclosure return is required for each tax spared arrangement entered into.

There has been a recent procedural change. The completed forms are now to be sent to:

  • Manager, International Revenue Strategy
    Inland Revenue Department
    PO Box 2198
    Wellington 6140