The UK government today released the synthesized text of the UK-New Zealand tax treaty, prepared jointly by the competent authorities of the two countries. The document reflects how the UK and New Zealand believe their 1983 tax treaty was modified by the countries’ 2018 ratification of a multilateral tax treaty.
The UK and New Zealand both signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) in June 2017 and ratified the document in June 2018. The MLI operates to amend the bilateral tax treaties of its signatories to conform existing treaty provisions to provisions agreed to by OECD and G20 countries in the 2015 base erosion profit shifting (BEPS) plan outcomes.
While the synthesized text is not a legal document, it aims to clarify how the MLI modifies several aspects to the UK-New Zealand agreement.
According to the synthesized text, changes made by the MLI to the 1983 UK-New Zealand tax treaty include new provisions addressing arbitration of tax disputes, transparent entities, dual resident entities, corresponding adjustments in transfer pricing, permanent establishment, and tax treaty abuse. The MLI also adds new language in the preamble of the UK-New Zealand tax treaty stating that the treaty was not meant to sanction tax avoidance.
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