Updated China DTA
In April this year, The Double tax Agreements (China) Order 2019 (LI 2019/241) was signed between the New Zealand Government and its counterpart, the Government of the People’s Republic of China.
The agreement and protocol between the two countries will come into force on 31st October 2019 and will revoke the present 1986 agreement at this time accordingly. Most of the provisions of the new agreement will have effect from 1st January 2020 in respect of taxes to be withheld at source, and for any taxable year commencing post this date in the case of other taxes.
A few changes I noted between the two agreements (besides becoming gender-neutral):
- The tiebreaker test for dual resident companies moves from being one of a “head office” determination to instead being one determined by mutual agreement by the competent authorities of the respective Contracting States, having regard to such relevant factors as the company’s place of effective management, place of incorporation etc;
- Under the permanent establishments article, there is a broadening of the dependent agent principle, where the test expands to include any person who not only habitually concludes contracts on behalf of their enterprise in the other State, but additionally where any person plays a principal role leading to the conclusion of contracts that are routinely concluded without material modification by the enterprise; and,
- The across the board 15% NRWT rate on dividends now reduces to 5% where the shareholder is a company which owns at least 25% of the paying company (throughout a 365 day period which includes the dividend payment date).
IR Cheques Update
Further to my recent AWIR commentary in which I confirmed that IR would cease to accept any cheques for tax payments from 1st March 2020 (search with keyword AD268 on IR’s website for more info), equally in relation to GST refund cheques being issued by IR, these have been stopped as at 25th September 2019. Consequently, taxpayers will need to ensure their IR accounts reflect an active bank account where GST refunds can be banked into, otherwise the credits will remain sitting in the relevant GST period until such details have been provided to IR.
