The High Commission in London has confirmed that the Governments of New Zealand and the Isle of Man have appropriately completed their legal ratification processes regarding the Tax Information Exchange Agreement (TIEA) and Double Taxation Agreement (DTA) signed by the countries. With the stipulated one year waiting period over, as outlined in the agreements, the DTA and TIEA came into force on July 27th.

Under the new TIEA, the Governments of both countries will be able to request taxation and bank information on taxpayers in cases of suspected tax evasion or investigations. The agreement is aimed at greatly reducing instances of tax evasion between the two countries, and counts towards the Organization of Economic Cooperation and Development’s (OECD) standards of international tax transparency.

The DTA eliminates the occurrence of double taxation on incomes earned in either country, by allocating taxation rights to Governments, on a pre-determined set of taxpayer incomes. The DTA also addresses transfer pricing adjustments on transactions carried out by cooperation operating between the nations.

The Isle of Man Government stated that the now-effective agreement shows the country’s dedication to upholding internationally agreed standards on taxation and cooperation, along with the principles of transparency and effective exchange of information in tax matters.

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Last week the IRD released a statement disclosing its intention to utilize New Zealand’s existing Tax Information Exchange Agreements (TIEA) to catch potential tax evaders. Martin Scott, Group Manager of Assurance, revealed that the IRD is particularly interested in discovering New Zealand tax residents undisclosed offshore bank accounts, overseas life-insurance policies and superannuation benefits.

Under current New Zealand tax legislation, taxpayers are required to disclose all of their incomes, including those from foreign sources. According to Martin Scott, governments worldwide are becoming increasingly cooperative with New Zealand authorities in sharing tax and bank account information for the purpose of audits and criminal investigations. New Zealand is currently engaged in 15 separate bi-lateral TIEA agreements. Martin Scott added that in the future he expects even greater levels of availability of information on financial transactions involving New Zealanders.

Taxpayers who hold undisclosed offshore assets have been advised consult with a professional tax advisers regarding their situation. New Zealanders who are knowingly evading their tax obligations through the use of offshore assets are advised to consider making a voluntary information disclosure to the IRD. Currently, failure to reveal appropriate financial information can attract severe punishment, including a 150 percent shortfall penalties and criminal prosecution. Martin Scott warned tax evaders to make appropriate use of any time left before their assets are discovered in an IRD investigation.

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On May 12th the New Zealand Government announced the signing of an Order in Council for the DTA between New Zealand and Singapore. The signing of the Order officially incorporates the agreement into national legislation. According to Peter Dunne, New Zealand Revenue Minister, the DTA will come into effect when the equivalent legal ratification process is carried out by the Government of Singapore.

The new agreement is intended to replace the DTA signed by Singapore and New Zealand in 1973. The DTA will lower withholding rates on dividends, royalties and interest. As the bi-lateral agreement will be updated to modern standards it will also serve to increase the levels of protection and certainty for cross-border business. The DTA will also conform to the international recognized standards of taxation transparency and information sharing, as set out by the Organization for Economic Cooperation and Development.

Singapore currently holds 61 Comprehensive Double Taxation Agreements, 7 limited taxation treaties, and 17 signed but un-ratified DTAs. New Zealand holds 35 ratified DTAs, and an additional 15 Tax Information Exchange Agreements.

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On March 17th Peter Dunne, New Zealand Revenue Minister, announced that New Zealand had signed two new TIEA agreements, bringing the national total to 15. The newly signed bilateral agreements are Organization for Economic Cooperation and Development (OECD) model documents which provide a internationally agreed upon standard for the exchange of tax data between participating nations in civil and criminal investigations. The new TIEAs will come into effect when each country in the agreement gives legal effect to the document, which in New Zealand occurs by Order of the Council.

TIEAs have become an important benchmark for nations as means of demonstrating commitment to internationally agreed upon standards of taxation transparency. A jurisdiction with 12 or more signed TIEAs will be considered to have adequately implemented these standards, and be placed on the “White List” of nations. New Zealand currently resides on the White List, while both signing parties are ranked in the Grey List.

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The second protocol to the New Zealand-Belgium DTA was created to ensure the standing agreement’s relevance and applicability to the current tax laws of both countries. The DTA agreement is required to be amended in both countries before the second protocol can come into legal effect, in New Zealand this is done by Order in Council. Peter Dunne claimed in a media statement on December 10th, that he expects progress to be announced in early 2010.

The original DTA between New Zealand and Belgium was signed on September 15th, 1981, and came into force December 8th, 1983. New Zealand currently holds 35 DTA agreements and 10 Tax Information Exchange Agreements, one of which is with Belgium.

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New Zealand has signed Tax Information Exchange Agreements (TIEA) with the Cayman Islands, the British Virgin Islands and Gibraltar. The Gibraltar agreement was signed in a London ceremony, while the other two were signed in Washington DC.

Peter Dunne, New Zealand Revenue Minister, announced these new agreements on the 14th of August. He commented “Recent months have seen a flurry of TIEA signings internationally, as low-tax offshore financial centers seek to achieve a sufficient number of TIEAs to allow them to be seen as meeting the OECD’s standards for transparency and information exchange.”

The TIEA is a bilateral agreement, allowing for procedures by which tax information can be exchanged between two countries, they are aimed at improving tax compliance internationally. The agreements will only come into affect when both countries have given legal effect to them.

In a London ceremony on the 22nd of July, Revenue Minister Peter Dunne signed a Tax Information Exchange Agreement with Guernsey on behalf of New Zealand. In a Government released statement, Peter Dunne said “The Tax Information Exchange Agreement with Guernsey will help to encourage greater co-operation between tax authorities,” and “I am very pleased with this important addition to New Zealand’s network of information exchange agreements.”

The Tax Information Exchange Agreement was put in place to allow a procedure by which the two governments can request tax records, business books and accounts, bank information, ownership information, with the explicit aim of preventing tax evasion.

The new agreement which allows for New Zealand and the Cook Islands to exchange information held by banks and other financial institutions, and also information on who benefits in company ownership chains and on the settlors, trustees and beneficiaries of trusts.

This is the third such agreement for New Zealand, with Bermuda and Netherlands Antilles being the first two. The agreement was signed on the 10th of July, by New Zealand Prime Minister John Key in Avarua, Rarotonga. In regards to the TIEA, John Key said “We welcome the signing of this important agreement with the Cook Islands, with whom we have a close historical, economic and cultural relationship”.

The TIEA will be New Zealand’s second agreement of such a nature, following the first which is Netherlands Antilles. According to Revenue Minister Peter Dunne others are already under negotiation. This is on top of New Zealand’s 35 Double Taxation Agreements. The TIEA will be signed at the New Zealand Embassy in Washington DC.

According to Mr. Dunne, the TIEA will make it easier for the partner countries to access information about someone residing in either country, for taxation purposes. This will also aid in the process of discovering any assets that have not been disclosed to governments on either side.