NZ/Thailand Double Tax AgreementForeign Affairs and Trade
New Zealand has signed a double tax agreement with Thailand which will reduce costs for companies doing business in Thailand, Minister of Revenue Max Bradford and Foreign Minister Don McKinnon announced in a joint statement today.
The Ministers said the Government welcomed the agreement as it would reduce compliance costs and would help stimulate trade and investment with Thailand, an important market for New Zealand in South East Asia.
Key features of the agreement are:
- Withholding tax rates are limited to 15% for dividends; 10% for interest, and 15% or 10% for royalties (depending on the type of royalty).
- Business profits will generally be exempt in the host country if the business is of a temporary nature.
- Some mobile services such as consultancy, building, installation, and natural resource exploration and exploitation must be conducted in the other country for over six months before that country may tax the income.
- Income from professional services may only be taxed in the host country if the person performing the services is present for more than 183 days or has a fixed base in that territory.
- Wages and salaries will generally also require a 184-day period of presence before they may be taxed in the host country, although this period does not apply if the employer is a resident of that country or has a permanent establishment there.
- Profits from insurance, coastal shipping, domestic air transport, real property, agriculture, forestry, and fishing may be taxed in the country in which they are situated.
- Pensions are to be taxed solely by the State in which the recipient of the pension payment is resident.
- Certain forms of discriminatory tax treatment between non-residents by either tax authority are prohibited.
Mr Bradford and Mr McKinnon said Ministers from both countries were endeavouring to bring the new treaty into force as soon as possible. It is expected that the agreement will apply in New Zealand from January 1 1999 for withholding tax, and from the 1999/2000 income year for income tax. The Agreement can be viewed under "Double Tax Agreements", which is located under "Other Information" on the home page of the Inland Revenue Department web site at www.ird.govt.nz.
In conclusion, Mr McKinnon commented that he was pleased that New Zealand had been able to negotiate the agreement with Thailand, a leading emerging economy in South East Asia. "The agreement will help pave the way to stronger economic linkages between our two countries".