By Sarah N. Lynch
Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- New Zealand and the United States officially signed a protocol Monday to update their 1982 income tax treaty in a new agreement that will help lower tax rates on certain dividends, interest and royalties.
In a signing ceremony at the U.S. Treasury building, Deputy Secretary Robert M. Kimmitt praised the updated treaty, and New Zealand Ambassador to the U.S. Roy Ferguson said the treaty is "particularly important at a time of economic uncertainty."
The new protocol, which now awaits transmittal by President George W. Bush to the U.S. Senate, aims to bring the existing 1982 tax treaty into "closer conformity with current U.S. tax treaty policy," Treasury officials said in a release.
If officially approved, it will allow for the elimination of source-country taxation on certain direct dividends, effectively reducing the tax rate to zero from 15%.
It would also reduce the tax rate on interest paid to banks or other financial enterprises to zero from 10% in cases where the payer of interest isn't owned or controlled by the bank.
Taxation limits on the cross-border payments of royalties, meanwhile, would be reduced to 5% from 10%.
The United States is one of New Zealand's major trading partners. In 2007, 11.5% of all exports from New Zealand went to the U.S., according to the CIA's World Factbook. New Zealand's imports from the U.S. in the same year made up 9.7% of its total imports.
The newly signed protocol also includes some technical updates and modernizes the rules governing limitation on benefits, non-discrimination and the exchange of information between the two countries.
"A protocol that lowers the tax rate on dividends and royalties and other programs is to be welcomed," Ferguson said.
-By Sarah N. Lynch, Dow Jones Newswires; 202-862-6634; sarah.lynch@dowjones.com
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(END) Dow Jones Newswires
December 01, 2008 17:15 ET (22:15 GMT)

Publié le 01 Décembre 2008 Copyright © 2008 Dowjones