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.