UNITED STATES - NEW ZEALAND INCOME TAX …

1 UNITED STATES - NEW ZEALAND INCOME TAX CONVENTIONC onvention, With Protocol, Signed at Wellington July 23, 1982;Transmitted by the President of the UNITED STATES of America to the Senate August 13, 1982(Treaty Doc. No. 97-27, 97th Cong., 2d Sess.);Reported Favorably by the Senate Committee on Foreign Relations July 11, 1983 (S. Ex. 98-15, 98th Cong., 1st Sess.);Advice and Consent to Ratification by the Senate July 27, 1983;Ratified by the President August 23, 1983;Ratified by New ZEALAND October 18, 1983;Ratifications Exchanged at Washington November 2, 1983;Proclaimed by the President December 5, 1983.

2 Entered into Force November 2, EFFECTIVE DATE UNDER ARTICLE 27: 2 NOVEMBER 1983 TABLE OF ARTICLESA rticle 1----------------------------------Gener al ScopeArticle 2----------------------------------Taxes CoveredArticle 3----------------------------------Gener al DefinitionsArticle 4----------------------------------Resid enceArticle 5----------------------------------Perma nent EstablishmentArticle 6----------------------------------Incom e from Real PropertyArticle 7----------------------------------Busin ess ProfitsArticle 8----------------------------------Shipp ing and Air TransportArticle

3 9----------------------------------Assoc iated EnterprisesArticle 10---------------------------------Divid endsArticle 11---------------------------------Inter estArticle 12---------------------------------Royal tiesArticle 13---------------------------------Alien ation of PropertyArticle 14---------------------------------Indep endent Personal ServicesArticle 15---------------------------------Depen dent Personal ServicesArticle 16---------------------------------Limit ation on BenefitsArticle 17---------------------------------Artis tes and AthletesArticle 18---------------------------------Pensi ons and AnnuitiesArticle 19---------------------------------Gover nment ServiceArticle 20---------------------------------Stude ntsArticle 21---------------------------------Other IncomeArticle 22---------------------------------Relie f from Double TaxationArticle 23---------------------------------Non-d iscriminationArticle 24---------------------------------Mutua l Agreement ProcedureArticle 25---------------------------------Excha nge of Information and Administrative

4 AssistanceArticle 26---------------------------------Diplo matic Agents and Consular OfficersArticle 27---------------------------------Entry into ForceArticle 28---------------------------------Termi nationProtocol-------------------------- ---------of 23 July, 1982 Letter of Submittal-----------------------of 31 July, 1982 Letter of Transmittal---------------------of 13 August, 1982 The Saving Clause ---------------------Paragraph 3 of Article 1 TAX convention WITH NEW ZEALAND AND RELATED PROTOCOLMESSAGEFROM THE PRESIDENT OF THE UNITED STATESTRANSMITTINGA convention BETWEEN THE UNITED STATES OF AMERICA AND NEW ZEALANDFOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OFFISCAL EVASION WITH RESPECT TO TAXES ON INCOME , TOGETHER WITH ARELATED PROTOCOL, SIGNED AT WELLINGTON ON JULY 23, 1982 LETTER OF SUBMITTALDEPARTMENT OF STATE,Washington, , July 31, 1982.

5 THE PRESIDENT: I have the honor to submit to you, with a view to its transmission to theSenate for advice and consent to ratification, the convention between the UNITED STATES ofAmerica and New ZEALAND for the avoidance of double taxation and the prevention of fiscalevasion with respect to taxes on INCOME , together with a related Protocol, signed at Wellingtonon July 23, 1982. The convention is based to a large extent on the UNITED STATES draft model INCOME taxconvention published by the Department of the Treasury in June 1981 and the OECD modelpublished in January 1977.

6 It takes into account changes in the INCOME tax laws and tax treatypolicies of the two countries. With respect to taxes on investment INCOME , the convention provides for limits on the tax atsources as follows: 15 percent on dividends, 10 percent on interest (except interest paid to theother government or to a wholly-owned instrumentality of the other government, which isexempt from tax at source), and 10 percent on royalties. New ZEALAND agrees to apply the 15percent rate on dividends as of April 1, 1982, the date on which its statutory rate increased to 30percent, provided that instruments of ratification of the convention are exchanged before April1, 1984.

7 This stipulation is included so that the Government of New ZEALAND will not have tomake refunds of tax retroactively for more than two years. In the interim, before the Conventionenters into force, dividends derived from New ZEALAND will be subject to a tentative withholdingtax of 30 percent. At the request of the UNITED STATES , the convention includes a provision permitting eitherContracting State to tax gains derived by a resident of the other State on the disposition of aninterest in real property located in the first State.

8 In addition, the convention allows the taxation of business profits in certain cases beyondthose covered in the UNITED STATES model by providing a somewhat broader definition of the term"permanent establishment". For example, supervisory activities in connection with a constructionsite constitute a permanent establishment if carried on for longer than twelve months, andactivities in connection with the exploration or extraction of natural resources constitute apermanent establishment if carried on for longer than six months in any consecutive twelvemonth period.

9 The rules governing the taxation of remuneration for personal services are similar to thoseother UNITED STATES treaties, except that the 183-day threshold for taxation of employees isdefined in terms of a 12-month period instead of a taxable year. Unlike the existing convention of any other New ZEALAND INCOME tax convention , the newConvention includes an article on non-discrimination. The article, by its terms, will not apply toincome tax laws reasonably designed to prevent tax avoidance and evasion, or to tax provisionswhich are in force on the date of signature of the convention (or subsequently enacted, butsimilar in general purpose or intent to those already in force).

10 The non-application of the non-discrimination article to any such tax provisions is contingent upon their not providing fordifferent treatment between residents or citizens of the other Contracting State and residents orcitizens of any third state (except where the provisions are in an international agreement). Ifeither country considers that future taxation measures adopted by the other country infringe uponthese principles, the competent authorities of the two countries will endeavor to resolve the issue. The Protocol confirms certain understandings which the signatories agree are to form anintegral part of the convention .