Double tax agreements (DTAs) are international treaties signed between two countries to avoid double taxation on the same income. These agreements help in promoting international trade and investment by providing relief from double taxation, thereby reducing the tax burden on businesses and individuals.
One such agreement is the Double Taxation Avoidance Agreement (DTAA) between New Zealand and India. This treaty was signed in 1986 and has been in effect since 1987. The main aim of this agreement is to eliminate double taxation on income earned by residents of both countries.
The DTAA between New Zealand and India covers various types of income, including income from business operations, dividends, interest, royalties, and capital gains. The agreement provides for a tax credit mechanism, which allows taxpayers to claim a credit for taxes paid in the other country against their domestic tax liability.
The agreement also contains provisions for resolving disputes between the tax authorities of both countries through mutual agreement procedures. This helps in preventing any conflict between the two countries and ensures that taxpayers are not subjected to double taxation.
In order to avail the benefits of the DTAA between New Zealand and India, taxpayers need to provide a tax residency certificate issued by the tax authorities of their respective countries. This certificate confirms that the taxpayer is a resident of the country for tax purposes and is eligible for the benefits under the agreement.
Further, it is important to note that the DTAA between New Zealand and India may not apply to all taxpayers and income types. Therefore, it is advisable to seek professional advice before taking any action that may have tax implications.
In summary, the Double Tax Agreement between New Zealand and India is a significant treaty that helps in reducing the tax burden on residents of both countries. By eliminating double taxation, this agreement promotes international trade and investment and supports the growth of businesses and individuals alike.