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APAC Tax Matters - March 2012 - New Zealand - EY - China

APAC Tax Matters: March 2012New Zealand


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Tax schemes and aggressive tax planning

The Inland Revenue has introduced a new page on their website “Tax schemes and aggressive tax planning” as part of its aim to assist taxpayers in “getting it right”. The page sets out the Department’s views on:

  • What’s wrong with tax avoidance
  • Issues to consider before entering into an arrangement
  • Technical information and other resources that may be relevant to tax avoidance such as recent and other significant court decisions, revenue alerts and compliance focus issues released by Inland Revenue and relevant articles published by Inland Revenue in the Chartered Accountant’s journal
  • Types of tax planning that concerns Inland Revenue including income shifting or sheltering, income deferral, accelerating the use of losses or credits, creating or inflating expenses, changing the character of receipts or outlays and GST specific avoidance
  • Risks of investing in tax schemes
  • Making voluntary disclosures if you’re caught in a tax scheme
  • Reasons Inland Revenue starts investigating

For more information please refer to this link below:
http://www.ird.govt.nz/technical-tax/questions/questions-general/qwba-1103-it-ltc-interest-deductibility.html

New Zealand / Hong Kong Double Tax Agreement in force

The double tax agreement (DTA) between New Zealand and Hong Kong came into force on 9 November 2011.

The new DTA will provide certainty over the tax treatment of cross-border investment income for both New Zealand and Hong Kong investors. Business profits of a New Zealand resident company for example, will only be taxable in Hong Kong where they relate to a permanent establishment maintained in Hong Kong. The same will apply to Hong Kong resident companies deriving business profits from New Zealand.

The new DTA also introduces lower withholding tax rates on dividends (ranging from 0% to 15% depending on the shareholding of the parent company and certain other criteria), interest (10%) and royalties (5%). These rates are in line with agreements concluded with Australia and the United States.

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.

The new withholding tax rates will apply from 1 April 2012. For all other New Zealand taxes, the DTA will apply for income years beginning on or after 1 April 2012.

A copy of the DTA can be viewed at the link below:
http://legislation.govt.nz/regulation/public/2011/0354/latest/DLM3995501.html


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