Tax treaty developments

New Zealand's new double tax agreement with Czech Republic has entered into force. It will take effect in both countries from 1 January 2009 for withholding taxes. For other taxes it will generally take effect from 1 April 2009 in New Zealand and from 1 January 2009 in Czech Republic.

In other treaty developments an Order in Council (PDF 110KB) was signed on Monday adding Mexico and Austria to the list of treaty partners who have access to the income tax exemption (in section CW 12 of the Income Tax Act 2007) for gains made on the sale of shares in unlisted New Zealand companies by certain non-resident investors. A second Order in Council (PDF 296KB) was signed on Monday incorporating into New Zealand law a new tax information exchange agreement with the Netherlands on behalf of the Netherlands Antilles.

For more information see the government's media statement and text of the agreements.

Hon Peter Dunne
MP for Ohariu Belmont
Minister of Revenue
Associate Minister of Health

MEDIA STATEMENT

Tax treaty developments: Czech Republic, Mexico, Austria, Netherlands Antilles

The new double tax agreement between the Czech Republic and New Zealand has come into effect, one of several tax treaty developments to take place this week.

"I welcome the entry into force of our new double tax agreement with the Czech Republic, which is our 35th such treaty," Revenue Minister Peter Dunne said today.

"Trade and investment between our two countries is growing, and there is excellent potential for further growth. New Zealand exports to the Czech Republic last year, consisting mainly of wool and lifting machinery, were worth $9.5 million. For the same period we imported over $30 million of goods – mainly cars, tyres, tools and electrical apparatus – from the Czech Republic.

"Double tax agreements are useful tax treaties that reduce tax impediments to trade and investment between two countries. They prevent double taxation, give greater tax certainty to people doing cross-border business, lower compliance costs and lower tax on some income.

"In a further development, an Order in Council adds Mexico and Austria to the list of our treaty partners who have access to the income tax exemption for gains made on the sale of shares in unlisted New Zealand companies by certain non-resident investors.

"Those are standard changes that simply remove any risk that gains on the values of those shares might be taxed here, thus removing a potential tax barrier to foreign venture capital investment into New Zealand.

"A second Order in Council incorporates into New Zealand law a new tax information exchange agreement with the Netherlands on behalf of the Netherlands Antilles.

"Tax information exchange agreements are bilateral international treaties that are designed to make it easier for tax administrations to detect and prevent tax avoidance.

They allow both parties to request of each other information such as tax records, business books and accounts, bank information and ownership information.

"The Netherlands Antilles agreement will come into force once the final diplomatic procedures have been completed, which is expected to occur in early October," Mr Dunne said.

The new double tax agreement with the Czech Republic and the two Orders in Council will be available at www.taxpolicy.ird.govt.nz.

Contact:
Ted Sheehan, Press secretary
Cell: 021 638 920, Tel: 04 470 6985