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Wellington, August 13, 2018
Revenue Minister Stuart Nash has said that New Zealand’s ability to detect and prevent tax evasion is enhanced by an update to our Double Tax Agreement (DTA) with Hong Kong which is now in force.
The update to the 2010 DTA removes an impediment to the automatic exchange of information (AEOI) between the two tax jurisdictions.
The following is a Statement issued by Mr Nash.
“The Double Tax Agreement with Hong Kong is one of 40 such tax treaties with our main trading and investment partners.
They encourage growth in economic ties by reducing tax impediments to cross-border trade and investment.
Greater Certainty
DTAs provide greater certainty of tax treatment, eliminate double taxation, reduce withholding taxes on cross-border investment returns, and exempt certain short-term activities from income tax.
But they also enable New Zealand and Hong Kong tax officials to help each other to detect and prevent tax avoidance and evasion.
DTAs do this by establishing a mechanism for exchanging information.
Tax on worldwide income
New Zealand residents are taxed on their worldwide income and so the exchange of information is critical to effective tax enforcement.
It makes possible to obtain off-shore information to verify that residents are correctly reporting their foreign income.
Before these updates took effect, information was only exchanged on request between Hong Kong and New Zealand. The update allows for automatic information exchanges under a global standard supported by the OECD and G20.
Compliance issues
Under this AEOI initiative, New Zealand financial institutions must review their accounts and compile information which is then reported to Inland Revenue.
The updated double tax agreement will allow New Zealand’s first automatic exchange of information with Hong Kong to occur by September 30, 2018.
The AEOI initiative is an international response to mounting concerns with the problem of off-shore tax evasion, that is, the ability of individuals and entities to evade tax by hiding their wealth in off-shore accounts.
Hong Kong is an important international financial centre and if it was not included as an AEOI exchange partner it would leave a significant gap in our tax compliance network. We are progressively expanding and updating our network of double tax agreements to clamp down on tax evasion.
Picture of Stuart Nash from file
