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