New Zealand Tax Treaty

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United States-New Zealand Tax Treaty

New Zealand International Tax Compliance Rules

Quick Summary.  New Zealand is comprised of two major islands located in the South Pacific.  

New Zealand imposes a flat tax on the consumption of goods and services (the GST).  

In 2018, the country adopted the Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018, which aligns with the OECD’s BEPS framework.  Among its aims, the framework imposes restrictions on multinationals’ interest rates, imposes hybrid mismatch rules, artificial permanent establishment rules, and profit shifting rules, as well as amendments to an existing thin capitalization regime.  

U.S.-New Zealand Tax Treaty

In 2019, New Zealand adopted the Taxation (Research and Development Tax Credits) Act 2019.  The act provides for certain credits on research and development expenditures.  

New Zealand Tax Treaty.


Common Legal Entities.

Tax Authorities

Tax Treaties.

  • New Zealand is party to approximately 40 tax treaties and 19 tax information exchange agreements.
  • The OCED’s MLI entered into force for New Zealand on 1 October 2018.
  • In 2019, New Zealand entered into a Doubt Tax Agreement with the People’s Republic of China that modernized its prior 1986 agreement.  

Corporate Income Tax Rate.  

Individual Tax Rate

Corporate Capital Gains Tax Rate

Individual Capital Gains Tax Rate


Withholding Tax.




Transfer Pricing.

CFC Rules.

Hybrid Treatment.

Inheritance/estate tax


New Zealand imposes tax on net income at the national level. The definition of income subject to tax is expansive; capital gains, however, are normally not included for income tax purposes.  Taxable income is computed on an annual basis and is either taxed by assessment or by withholding tax.  Aside from certain exceptions, New Zealand residents and nonresidents are generally subject to the same rules and tax rates on New Zealand-source income. New Zealand has special provisions with respect to foreign dividends and offshore income earned through controlled foreign companies. 


Individuals resident in New Zealand are taxed on their worldwide income. An individual’s taxable income is the sum of all gain and profits from the following sources: employment income; business income; pension income; and investment income (dividends, interest, and royalties). New Zealand has no capital gains tax as such and capital gains are normally not included in income for income tax purposes. Profits from the sale of personal property or real property and some unrealized capital accretions may, however, be included in income in certain circumstances. Losses can be carried forward indefinitely to offset future net income from any source.

New Zealand-source dividends and interest income are subject to resident withholding tax. Royalties are not subject to resident withholding tax.

Generally, no deductions are allowed to employees for expenses incurred in producing employment income. Employees, as well as other individuals, are entitled to allowable tax credits, which are deducted from income tax payable.


Companies that are resident in New Zealand are taxed on their worldwide income. The definition of company is broad and confers company status for tax purposes on unit trusts, incorporated societies, and credit unions. For income tax purposes, a company is resident in New Zealand if it passes any one of the following four tests: (1) it is incorporated in New Zealand; (2) it has its head office in New Zealand; (3) it has its “center of management” in New Zealand; or, (4) it is controlled by its directors in New Zealand.

In general, all income derived by a corporation is taxable business income; this includes income from sales of goods and services, commissions, rents, royalties, rents and dividends.  Capital gains are generally not subject to tax. Profits from the sale of personal property or real property and some unrealized capital gains may, however, be included in the taxable income in certain circumstances.

Dividends received by a resident company from a wholly-owned subsidiary resident in New Zealand are exempt from tax.  Most foreign dividends received by resident companies are exempt from tax.  New Zealand uses an imputation system.

As such, the payment of tax by a resident company gives rise to “imputation credits,” which the company can attach to its dividends when paying them out to its shareholders. The dividends are grossed up in shareholders’ hands by the value of imputation credits attached to the dividends. The value of those imputation credits is limited by the amount of income tax paid by the distributing company.  Shareholders can use the attached imputation credits as tax credits against their tax liability. Corporate recipients may convert excess imputation credits into tax losses. 

Other Taxes

Inheritance, gift and wealth taxes

Gift duty is imposed on the donor of gifts made within a 12-month period, depending on the value of the gifts. Gifts below certain amounts are not subject to the duty.  New Zealand does not levy a wealth tax.

Other indirect taxes

New Zealand imposes a goods and services tax (“GST”) which is a value-added tax on the consumption of goods and services. Although the GST is levied at each stage of the economic chain, it is ultimately borne by the final customer. The GST due on any sale is a percentage of the sale price less all the tax paid at the preceding stages.

Tax Treaty Network – International Tax Attorneys

Our international tax expertise allows us to guide clients through tax planning and compliance so that they can focus on what matters most. At Freeman Law, our clients are engaged in an interconnected business environment that spans across the globe.  From supply chains to markets, cross-country taxation impacts every global business.

Do you have questions about New Zealand Tax Treaties? Schedule a consultation with one of Freeman Laws International Tax Experts Today!