Hon Dr Michael Cullen
Minister of Finance
Hon Peter Dunne
Minister of Revenue
MEDIA STATEMENT
Views sought on Australia-NZ double tax agreement
The government is inviting comment on matters that should be raised in the forthcoming negotiation of a new double tax agreement between Australia and New Zealand, Finance Minister Michael Cullen and Revenue Minister Peter Dunne announced today.
Double tax agreements are bilateral treaties that remove tax obstacles to cross-border trade and investment and prevent businesses being taxed twice on the resulting income. They also give greater certainty about how cross-border investment income is to be taxed, reduce compliance costs and lower tax on some income.
"Our double tax agreement with Australia is the most important of our 34 tax treaties, given the closeness of our economic relationship and the volume of investment between our two countries," the Ministers said.
"For example, around half of all direct investment from New Zealand goes into Australia, as does about a quarter of all our outbound investment. Similarly, about half of all direct investment into New Zealand, and almost a third of all inbound investment, comes from Australia.
"The current double tax agreement between Australia and New Zealand dates back to 1995, which is a long time in the business world. Although it was updated in 2005 to make a few urgent administrative changes, it is now time to negotiate a new agreement.
"The negotiation will review all matters covered by the agreement – including the taxation of business profits and services, and non-resident withholding tax rates.
"Bilateral tax treaties typically take several rounds to negotiate, because of their highly technical nature and because each government needs to be comfortable with the resulting alteration of its taxing rights. The first round of negotiations with Australia is expected to take place from 31 March to 4 April, with further rounds to follow later in the year.
"In the meantime, the government invites interested parties to raise any concerns or observations they may have about the application of the current double tax agreement with Australia, to ensure that they can be considered in the lead-up to negotiations," they said.
The deadline for comments is 22 March 2008. Interested parties should send their comments to:
[email protected]
or
Australia-New Zealand DTA negotiations
Policy Advice Division
Inland Revenue Department
PO Box 2198
Wellington
Contacts:
Chris Ritchie, press secretary to Dr Cullen, 04 471 9412
Ted Sheehan, press secretary to Peter Dunne, 04 470 6985 or 021 638 920