Second Protocol to the Double Tax Agreement between New Zealand and India

On 21 June 1999, the Second Protocol to the Double Tax Agreement between India and New Zealand was signed. The signing follows an announcement made on 12 September 1997 by the Minister of Revenue, the Rt Hon W F Birch, that the text of a protocol to amend the Double Tax Convention between New Zealand and India had been agreed by officials. The Second Protocol will clarify provisions in the Convention signed in 1986 and lower the maximum tax rates on dividends, interest, royalties and service fees.

Entry into Force and date of effect are governed by Article 9. The protocol came into force on 17 December 1999. The Second Protocol will have effect from the income year beginning 1 April 2000.

If you have any queries, please do not hesitate to contact me on e-mail (Paul.Cooper@ird.govt.nz), telephone (64-4) 474-7004, or fax (64-4) 474 7217.

A copy of the text of the Second Protocol is reproduced below.

SECOND PROTOCOL

The Government of New Zealand and the Government of the Republic of India,

Having regard to the Convention between the Government of New Zealand and the Government of the Republic of India for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income done at Auckland on the 17th day of October 1986 (hereinafter referred to as "the Convention"),

Have agreed as follows:

Article 1

Paragraph 1(a)(ii) of Article 3 of the Convention is replaced by the following:

"(ii)

the term "India" means the territory of India and includes the territorial sea and the airspace above it, as well as any other maritime zone in which India has sovereign rights, other rights and jurisdiction, according to the Indian law and in accordance with international law, including the U.N. Convention on the Law of the Sea;"

Article 2

Paragraph 3 of Article 4 of the Convention is replaced by the following:

"3.    Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident of the State in which its place of effective management is situated. If the State in which its place of effective management is situated cannot be determined, then the competent authorities of the Contracting States shall settle the question by mutual agreement."

Article 3

Paragraph 1 of Article 6 of the Convention is replaced by the following:

"1.     Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may also be taxed in that other State."

Article 4

In paragraph 2 of Article 10 of the Convention, "20 percent" is replaced by "15 percent".

Article 5

In paragraph 2 of Article 11 of the Convention, "15 percent" is replaced by "10 percent".

Article 6

In paragraph 2 of Article 12 of the Convention, "30 percent" is replaced by "10 percent".

Article 7

Paragraph 1 of Article 13 of the Convention is replaced by the following:

"1.    Income or gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may also be taxed in that other State."

Article 8

1.    Paragraph 2 of Article 24 of the Convention is replaced by the following:

"2.     The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be construed as preventing a Contracting State from charging the profits of a permanent establishment which a company of the other Contracting State has in the first-mentioned State at a rate of tax which is higher than that imposed on the profits of a similar company of the first-mentioned Contracting State."

2.    A new paragraph 5 is inserted immediately after paragraph 4 of Article 24 of the Convention and the original paragraph 5 of the Article is renumbered paragraph 6.

"5.     This Article shall not apply to any provisions of the taxation laws of a Contracting State which are reasonably designed to prevent or defeat the avoidance or evasion of taxes."

Article 9

1.    The Contracting States shall notify each other through diplomatic channels of the completion of the procedures required by the respective laws for the entry into force of this Protocol.

2.    This Protocol shall enter into force 30 days after the date of receipt of the later of the notifications referred to in paragraph 1 of this Article and its provisions shall have effect:

(a)	in New Zealand:  for any income year beginning on or after 1st April in the calendar year next following the date on which the Protocol enters into force;

(b)	in India:  for any "previous year" (as defined in the Income-tax Act, 1961) beginning on or after 1st April in the calendar year next following the date on which the Protocol enters into force.

IN WITNESS WHEREOF the undersigned, duly authorised by their respective Governments, have signed this Protocol.

Done in duplicate at New Delhi this twenty first day of June One Thousand Nine Hundred and Ninety Nine in the Hindi and English languages, both texts being equally authentic. In case of divergence between the two texts, the English text shall be the operative one.

Mr Adrian Simcock For the Government of New Zealand

Mr Ravi Kant For the Government of the Republic of India