Protocol amending RP- New Zealand tax treaty

This Tax Alert is issued to inform all concerned that new rates for dividends, interest and royalties shall effect starting January 1, 2016 in pursuant to the protocol amending the Republic of the Philippines and Government of New Zealand for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion.

The amended agreement has the following treaty rates:

Dividends

  • Unified to 15% from previous 15% and 25%

Interest

  • 10%, reduced  from 15%
  • Still exempt when paid to the government

Royalties

  •  Unified at 15%, from 15% and 25%

The definition of "royalties" under Article 12 has also been expanded to cover the supply of any assistance that is ancillary and subsidiary to, and is furnished as a means of enabling the application or enjoyment of, the property or right, equipment, or knowledge/information.

In case of transfer pricing adjustments in one jurisdiction, Article 9 on Associated Enterprises now provides for appropriate adjustment to the amount of the tax charged in other jurisdiction, subject to certain conditions.

New Zealand resident income earner or an authorized representative should file a duly accomplished BIR Form No. 0901 (Application for Relief from Double Taxation) together with required documents to the International Tax Affairs Division (ITAD) National Office to effect the treaty rates.