NZ-Hong Kong tax agreement in forceRevenue
A double tax agreement between New Zealand and Hong Kong is now in force, Revenue Minister Peter Dunne announced today.
Mr Dunne has welcomed the new agreement, which was signed in December last year.
“It will further strengthen New Zealand’s significant international cross-border trade and investment partnerships for the benefit of businesses, investors and taxpayers in both countries,” he said.
“The new agreement will give businesses greater certainty over the tax treatment of cross-border investment income, reduce compliance costs for both New Zealand and Hong Kong investors, and will lower withholding tax rates on dividends, interest and royalties in line with agreements concluded with Australia and the United States.”
The new withholding tax rates on dividends, interest and royalties will apply from 1 April 2012. For all other New Zealand taxes, the new agreement will apply for income years beginning on or after 1 April 2012.
The agreement also includes an OECD information exchange article which will allow New Zealand and Hong Kong to request and exchange information with their respective tax authorities.
“This builds on New Zealand’s current programme of tax information exchange agreements, which are important in helping our respective tax authorities to detect and take steps to prevent tax evasion,” Mr Dunne said.
Hong Kong is a significant investment and trading partner for New Zealand. It is New Zealand’s sixth largest source of total foreign investment, worth $3.72 billion in 2010, and New Zealand’s 12th largest export market.
Double tax agreements help encourage growth in economic ties between countries and promote cross-border trade by preventing businesses and individuals from being taxed twice on income earned in the other country. They also encourage investment by reducing withholding tax rates on interest and dividends.
The latest agreement brings the number of double tax agreements New Zealand has with other countries to 37. The full text of the New Zealand-Hong Kong double tax agreement is available at www.taxpolicy.ird.govt.nz.