Hon Peter Dunne
Minister of Revenue

12 August 2011

Dunne: lower NRWT rates for business with Mexico, Chile

Revenue Minister Peter Dunne today announced new, lower non-resident withholding tax rates on dividends and royalty payments under New Zealand’s double tax agreements with Chile and Mexico.

The new reciprocal withholding tax rate on royalties arising in New Zealand and Chile is 5%, down from 10%.

For dividend payments arising in New Zealand and Mexico, the new withholding tax rate has been reduced from 15% to either 5% or zero, depending on the size of the investor’s shareholding in the company paying the dividend and certain other criteria.

The new rates apply from retrospectively from 1 May 2010 and follow completion of diplomatic formalities under Most Favoured Nations obligations between New Zealand, Chile and Mexico.

The Most Favoured Nations obligations for Chile and Mexico were triggered when lower non-resident withholding taxes were negotiated as part of New Zealand’s double tax agreement with Australia which came into force on 1 May last year.

Double tax agreements prevent businesses that operate in two countries from being taxed twice.

They also encourage cross-border trade and investment by reducing tax obstacles, and lowering compliance costs and tax on some income.

New Zealand currently has 35 double tax agreements in force.

More information on the Chile and Mexico agreements is available at Inland Revenue’s tax policy website, www.taxpolicy.ird.govt.nz.

ENDS

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