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New Zealand Corporate - Withholding taxes

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Resident corporations and New Zealand branches of foreign corporations are generally required to withhold tax on payments of passive income. Rates on payments to non-residents under New Zealand's DTAs are set out in the table below.

Recipient WHT (%)
Dividends Interest Royalties
Resident corporations 33 (1) 28 (1) 0
Resident individuals 33 max 33 -
       
Non-resident corporations and individuals   (2)  
Non-treaty 0/15/30 (3) 15 (4) 15
Treaty:      
Australia 0/5/15 (5) 0/10 (5) 5
Austria 15 10 10
Belgium 15 10 10
Canada 5/15 (6) 10 5/10 (6)
Chile 15 10/15 (7) 5
China, People’s Republic of 15 10 10
Czech Republic 15 10 10
Denmark 15 10 10
Fiji 15 10 (8) 15
Finland 15 10 10
France 15 10 10
Germany 15 10 10
Hong Kong 0/5/15 (9) 0/10 (9) 5
India 15 10 10
Indonesia 15 10 15
Ireland, Republic of 15 10 10
Italy 15 10 10
Japan 0/15 (10) 0/10 (10) 5
Korea, Republic of 15 10 10
Malaysia 15 15 15
Mexico 0/5/15 (11) 10 10
Netherlands 15 10 10
Norway 15 10 10
Papua New Guinea 15 10 10
Philippines 15 10 15
Poland 15 10 10
Russian Federation 15 10 10
Samoa 5/15 (12) 10 10
Singapore 5/15 (13) 10 5
South Africa 15 10 10
Spain 15 10 10
Sweden 15 10 10
Switzerland 15 10 10
Taiwan 15 10 10
Thailand 15 10/15 (14) 10/15 (14)
Turkey 5/15 (15) 10/15 (15) 10
United Arab Emirates 15 10 10
United Kingdom 15 10 10
United States 0/5/15 (16) 0/10 (16) 5
Vietnam 5/15 (17) 10 10

Notes

  1. Resident WHT applies to both interest and dividends. Unless the recipient corporation holds an exemption certificate, and if the recipient provides a tax file number, the default rate of the interest WHT is 28%. Recipients can elect for the rate of interest withholding to be 28% or 33%. The rate of interest WHT is 33% where the recipient does not provide a tax file number.

    The rate of WHT on dividends paid is 33%, but the tax is reduced by the aggregate imputation and withholding payment credits attached to the dividend or taxable bonus share. Interest and dividends paid between group companies and in certain other limited circumstances are exempt from the WHT.

    Where a fully imputed dividend is paid to a corporate shareholder, there is no requirement to withhold resident withholding tax (RWT) or non-resident withholding tax (NRWT).

  2. Resident corporations paying interest to non-associated, non-resident corporations and individuals need not withhold tax if they have approved-issuer status and the security under which interest is payable is registered with Inland Revenue. In this case, the resident corporation pays a 2% levy (tax deductible) on the interest payments instead of the WHT otherwise applicable.
  3. NRWT is imposed on dividends at the following rates, regardless of the jurisdiction to which the dividends are paid:
    • 0% for fully imputed dividends paid to a shareholder holding 10% or more of the direct voting interests in the company and fully imputed non-cash dividends.
    • 15% for fully imputed cash dividends paid to a shareholder holding less than 10%.
    • 30% in most other cases, subject to any relief available under a DTA.
  4. Net interest income is subject to reassessment at the company tax rate where the payer and the recipient are ‘associated persons’, but WHT is the minimum liability. NRWT is not imposed where the recipient of the interest has a fixed establishment in New Zealand.
  5. The WHT on dividends is reduced from 15% to 5% for an investing company that has at least a 10% shareholding in the company paying the dividend. The rate reduces to 0% if the investing company holds 80% or more of the shares in the other company and meets other criteria. The WHT rate on interest is 10% but is reduced to 0% if it is payable to eligible financial institutions.
  6. The WHT on dividends is reduced from 15% to 5% for an investor who holds at least 10% of the shares in the company that pays the dividend. The WHT rate on royalties is reduced from 15% to 10% generally, with a further reduced rate of 5% for royalties relating to copyright, computer software, and others.
  7. The WHT on interest is reduced to 10% if the interest received is derived from loans granted by banks or insurance companies. In all other cases, 15%.
  8. The WHT on interest may differ in accordance with the rates prescribed by New Zealand legislation for interest paid to ‘associated persons’.
  9. The WHT on dividends is reduced from 15% to 5% for an investing company that has at least a 10% shareholding in the company paying the dividend. The rate reduces to 0% if the investing company holds 50% or more of the shares in the other company and meets other criteria. The WHT rate on interest is 10% but is reduced to 0% if it is payable to eligible financial institutions.
  10. The WHT rate on dividends is reduced from 15% to 0% for an investor who holds at least 10% of the voting power in the company paying the dividend (subject to certain conditions being met). The WHT rate on interest is 10% generally and 0% if it is payable to eligible financial institutions.
  11. The 0% WHT rate applies where the foreign company owns at least 80% of the voting rights in the paying company (directly or indirectly) for 12 months prior to the date the dividend is paid and meets other criteria. The 5% rate applies if the foreign company has a direct interest of at least 10% of the voting rights in the paying company.
  12. The WHT rate on dividends will reduce from 15% to a maximum of 5% for an investor who holds at least 10% of the shares in the company that pays the dividend.
  13. The standard WHT rate on dividends reduces to 5% for an investing company that has at least a 10% shareholding in the company paying the dividend.
  14. The WHT rate on interest is reduced to 10% if it is received by a financial institution or it is paid with respect to debt arising from a sale on credit of any equipment, merchandise, or services. The WHT rate is reduced to 10% for certain types of royalty.
  15. The WHT rate on dividends is reduced to 5% if the beneficial owner is a company holding at least 25% of the capital of the company paying the dividends and 15% in all other cases. The WHT rate on interest is reduced to 10% if the interest is paid to a bank and 15% in all other cases.
  16. The WHT rate on dividends is 5% for an investor who holds at least 10% of the shares in the company that pays the dividend; 0% if the investor holds 80% or more of the shares in the company and meets other criteria; 15% in all other cases. The WHT rate on interest is 10% but is reduced to 0% if it is payable to eligible financial institutions.
  17. The WHT rate on dividends is reduced to 5% if the beneficial owner is a company holding at least 50% of the voting power in the company paying the dividends and 15% in all other cases.

Supplementary dividend tax credit regime

The supplementary dividend tax credit regime applies only to fully imputed dividends paid to shareholders holding less than 10% of the shares in the company and NRWT rates of at least 15%.

Broadly therefore:

  • only portfolio investors (i.e. those with less than 10% holdings) with NRWT rates of at least 15% will qualify for relief under the supplementary dividend rules, and
  • a zero rate of NRWT applies to dividends paid to non-portfolio shareholders (i.e. shareholders with more than 10% holdings) and to any other dividends subject to lower tax rates, to the extent they are fully imputed.

Last Reviewed - 13 February 2019

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