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New Zealand, Samoa Sign DTA

by Mary Swire, Tax-News.com, Hong Kong

15 July 2015


The governments of New Zealand and Samoa have welcomed the signing of a double tax agreement on July 8, 2015 – Samoa's first – which will provide greater certainty for taxpayers doing business between the two territories and potentially lower cross-border tax rates.

Double tax agreements help to reduce tax barriers to two-way trade and investment by preventing cross-border income being taxed twice, therefore giving certainty about how that income will be taxed. They also lower withholding taxes, making it less costly for businesses in one country to invest in the other.

The agreement provides that income from dividends will be taxed at a maximum rate of five percent, if the beneficial owner is a company that directly holds at least 10 percent of the voting power in the company paying the dividends, or otherwise 15 percent.

Interest income will be subject to a maximum withholding tax rate of 10 percent, if the beneficial owner of the interest is a resident of the other contracting state. Royalties may be taxed in both states, but such royalties may only be taxed in the contracting state in which they arise at a maximum rate of 10 percent, providing the beneficial owner of the royalties is a resident in the other contracting state.

Prime Minister John Key said: "The signing of this double tax agreement is significant for our countries and will further strengthen the close relationship between New Zealand and Samoa."

"New Zealand is Samoa's second-largest trading partner. The agreement will provide a platform for increased trade and investment between our two countries, and will help assist the economic development of our Pacific island neighbor.

"Importantly, the tax agreement represents a further extension of New Zealand's tax treaty network into the Pacific. Once the agreement enters into force, it will bring New Zealand's network of tax treaties to a total of 40."

TAGS: tax | investment | business | double tax agreement (DTA) | interest | royalties | Samoa | agreements | withholding tax | New Zealand | dividends | trade

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