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India-New Zealand Double Taxation Avoidance Agreement (DTAA)

The Double Taxation Avoidance Agreement (DTAA) signed between the government of India and the government of New Zealand, initially on October 17, 1986, and subsequently modified through amending protocols, is aimed at preventing fiscal evasion with respect to taxes on income. The DTAA became effective on December 3, 1986, and has been adapted through amending protocols on August 29, 1996, June 21, 1999, and October 26, 2016, respectively.

Applicability

The India-New Zealand DTAA is based on the Organization for Economic and Co-operative Development’s (OECD) Model Tax Convention on Income and on Capital. It applies to individuals or entities who are residents of one or both of the contracting states. The DTAA covers the following taxes:

In New Zealand:

  1. Income tax
  2. Excess retention tax

In India:

  1. Income tax, including any surcharge
  2. Surtax

Key Takeaways

Here are some significant takeaways and provisions of the India-New Zealand DTAA:

  1. Taxation of Interest: Interest arising in one state and paid to a resident of the other state may be taxed in the other state.
  2. Taxation of Royalties and Fees for Technical Services: Royalties and fees for technical services shall be taxed in the state in which they arise in accordance with the laws of that state.
  3. Exchange of Information: The competent authorities of the contracting states shall exchange information related to taxation, necessary for executing the provisions of this DTAA.
  4. Mutual Agreement Procedure: Any dispute related to the provisions of this DTAA should be resolved through a mutual agreement procedure.
  5. Withholding Tax Rates: A withholding rate of 15% on dividends and 10% on interests, royalties, and fees for technical services has been agreed upon. An exemption on interests earned by government institutions is provided.
  6. Taxation of Entertainers and Athletes: Income derived by a resident of a contracting state in the other state, as an entertainer (e.g., theatre, motion picture, radio, or television artist) or as an athlete, from personal activities as such, may be taxed in that other state.

Inference

The India-New Zealand DTAA has promoted mutual cooperation, stability, and the exchange of tax-related information between the contracting states. The amending protocols have further strengthened the framework, enabling the exchange of tax-related information and providing assistance to the competent authorities of both contracting states. This has led to a reduction in tax evasion and avoidance between the two countries.

The permanent establishment article in the DTAA allows the country of source to tax profits attributed to a permanent establishment when the entity is a non-resident in the country of source. This provision helps ensure a fair distribution of tax liability between the two nations.

For comprehensive information, legal advice, or assistance with matters related to the India-New Zealand Double Taxation Avoidance Agreement or other legal concerns, please do not hesitate to contact Chandrawat & Partners. Our team of legal experts specializes in international tax agreements and is dedicated to offering tailored legal support to address your specific needs.

We are committed to delivering high-quality legal services, ensuring your satisfaction, and providing peace of mind. For inquiries or discussions related to your legal concerns, please reach out to us. We are here to serve your legal needs with professionalism and diligence.

To know more about DTAA relations between India and New Zealand, please download our Guide.

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