dtc agreement between japan and new zealand

8/12/2019 DTC agreement between Japan and New Zealand

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CONVENTION BETWEENJAPAN AND NEW ZEALAND

FOR THE AVOIDANCE OF DOUBLE TAXATIONAND THE PREVENTION OF FISCAL EVASIONWITH RESPECT TO TAXES ON INCOME

Japan and New Zealand,

Desiring to conclude a new Convention for theavoidance of double taxation and the prevention of fiscalevasion with respect to taxes on income,

Have agreed as follows:

Article 1PERSONS COVERED

This Convention shall apply to persons who areresidents of one or both of the Contracting States.

Article 2TAXES COVERED

1. The taxes to which this Convention shall apply are:

(a) in the case of Japan:

(i) the income tax;

(ii) the corporation tax;

(iii) the special income tax for reconstruction;and

(iv) the special corporation tax forreconstruction;

(hereinafter referred to as Japanese tax); and

(b) in the case of New Zealand:

the income tax

(hereinafter referred to as New Zealand tax).


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2. This Convention shall apply also to any identical orsubstantially similar taxes that are imposed after the date

of signature of the Convention in addition to, or in placeof, those referred to in paragraph 1. The competentauthorities of the Contracting States shall notify eachother of any significant changes that have been made intheir respective taxation laws, within a reasonable periodof time after such changes.

Article 3GENERAL DEFINITIONS

1. For the purposes of this Convention, unless thecontext otherwise requires:

(a) the term Japan, when used in a geographicalsense, means all the territory of Japan,including its territorial sea, in which the lawsrelating to Japanese tax are in force, and allthe area beyond its territorial sea, includingthe seabed and subsoil thereof, over which Japanhas sovereign rights in accordance withinternational law and in which the laws relatingto Japanese tax are in force;

(b) the term New Zealand means the territory of NewZealand but does not include Tokelau; it also

includes any area beyond the territorial seadesignated under New Zealand legislation and inaccordance with international law as an area inwhich New Zealand may exercise sovereign rightswith respect to natural resources;

(c) the terms a Contracting State and the otherContracting State mean Japan or New Zealand, asthe context requires;

(d) the term tax means Japanese tax or New Zealandtax, as the context requires;

(e) the term person includes an individual, acompany and any other body of persons;

(f) the term company means any body corporate orany entity that is treated as a body corporatefor tax purposes;

(g) the term enterprise applies to the carrying onof any business;


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(h) the terms enterprise of a Contracting State andenterprise of the other Contracting State mean

respectively an enterprise carried on by aresident of a Contracting State and an enterprisecarried on by a resident of the other ContractingState;

(i) the term international traffic means anytransport by a ship or aircraft operated by anenterprise of a Contracting State, except whenthe ship or aircraft is operated solely betweenplaces in the other Contracting State;

(j) the term national, in relation to a ContractingState, means:

(i) any individual possessing the nationality orcitizenship of that Contracting State; and

(ii) any legal person, partnership or associationderiving its status as such from the laws inforce in that Contracting State;

(k) the term competent authority means:

(i) in the case of Japan, the Minister ofFinance or an authorised representative of

the Minister of Finance; and

(ii) in the case of New Zealand, the Commissionerof Inland Revenue or an authorisedrepresentative of the Commissioner of InlandRevenue; and

(l) the term business includes the performance ofprofessional services and of other activities ofan independent character.

2. As regards the application of this Convention at anytime by a Contracting State, any term not defined thereinshall, unless the context otherwise requires, have themeaning that it has at that time under the laws of thatContracting State for the purposes of the taxes to whichthe Convention applies, any meaning under the applicabletax laws of that Contracting State prevailing over ameaning given to the term under other laws of thatContracting State.


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Article 4RESIDENT

1. For the purposes of this Convention, the termresident of a Contracting State means:

(a) in the case of Japan, any person who, under thelaws of Japan, is liable to tax therein by reasonof that persons domicile, residence, place ofhead or main office or any other criterion of asimilar nature; and

(b) in the case of New Zealand, any person who, underthe laws of New Zealand, is liable to tax as aresident of New Zealand.

The Government of a Contracting State or a politicalsubdivision or local authority thereof is also a residentof that Contracting State for the purposes of theConvention. A person is not a resident of a ContractingState for the purposes of the Convention if the person isliable to tax in that Contracting State in respect only ofincome from sources in that Contracting State.

2. Where by reason of the provisions of paragraph 1 anindividual is a resident of both Contracting States, thenthe individuals status shall be determined as follows:

(a) the individual shall be deemed to be a residentonly of the Contracting State in which apermanent home is available to the individual; ifa permanent home is available to the individualin both Contracting States, the individual shallbe deemed to be a resident only of theContracting State with which the individualspersonal and economic relations are closer(centre of vital interests);

(b) if the Contracting State in which theindividuals centre of vital interests issituated cannot be determined, or if a permanenthome is not available to the individual in eitherContracting State, the individual shall be deemedto be a resident only of the Contracting State inwhich the individual has an habitual abode;

(c) if the individual has an habitual abode in bothContracting States or in neither of them, theindividual shall be deemed to be a resident onlyof the Contracting State of which the individualis a national;


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(d) if the individual is a national of bothContracting States or of neither of them, the

competent authorities of the Contracting Statesshall settle the question by mutual agreement.

3. Where by reason of the provisions of paragraph 1 aperson other than an individual is a resident of bothContracting States, then the competent authorities of theContracting States shall endeavour to determine by mutualagreement the Contracting State of which that person shallbe deemed to be a resident for the purposes of thisConvention, having regard to the place of its head or mainoffice, its place of effective management and any otherrelevant factors. In the absence of a mutual agreement bythe competent authorities of the Contracting States, the

person shall not be considered a resident of eitherContracting State for the purposes of its claiming anybenefits provided by the Convention, except those providedby Article 25.

4. (a) Where under this Convention any income isrelieved from tax in a Contracting State and,under the laws in force in the other ContractingState, an individual, in respect of that income,is taxed by reference to the amount thereof thatis remitted to or received in that otherContracting State and not by reference to the

full amount thereof, then the relief to beallowed under the Convention in the first-mentioned Contracting State shall apply only toso much of that income as is taxed in the otherContracting State.

(b) Where under this Convention any income isrelieved from tax in a Contracting State and,under the laws in force in the other ContractingState, an individual, in respect of that income,is exempt from tax by virtue of being a temporaryresident of that other Contracting State withinthe meaning of the applicable law of that otherContracting State, then the relief to be allowedunder the Convention in the first-mentionedContracting State shall not apply to the extentthat that income is exempt from tax in the otherContracting State.


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5. For the purposes of applying this Convention:

(a) an item of income:

(i) derived from a Contracting State through anentity that is organised in the otherContracting State; and

(ii) treated as the income of the beneficiaries,members or participants of that entity underthe tax law of that other Contracting State,

shall be eligible for the benefits of theConvention that would be granted if it weredirectly derived by a beneficiary, member or

participant of that entity who is a resident ofthat other Contracting State, to the extent thatsuch beneficiaries, members or participants areresidents of that other Contracting State andsatisfy any other conditions specified in theConvention, without regard to whether the incomeis treated as the income of such beneficiaries,members or participants under the tax law of thefirst-mentioned Contracting State.

(b) an item of income:

(i) derived from a Contracting State through anentity that is organised in the otherContracting State; and

(ii) treated as the income of that entity underthe tax law of that other Contracting State,

shall be eligible for the benefits of theConvention that would be granted to a resident ofthat other Contracting State, without regard towhether the income is treated as the income ofthe entity under the tax law of the first-mentioned Contracting State, if such entity is aresident of that other Contracting State andsatisfies any other conditions specified in theConvention.

(c) an item of income:

(i) derived from a Contracting State through anentity that is organised in a state otherthan the Contracting States; and


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(ii) treated as the income of the beneficiaries,members or participants of that entity under

the tax law of the other Contracting State,

shall be eligible for the benefits of theConvention that would be granted if it weredirectly derived by a beneficiary, member orparticipant of that entity who is a resident ofthat other Contracting State, to the extent thatsuch beneficiaries, members or participants areresidents of that other Contracting State andsatisfy any other conditions specified in theConvention, without regard to whether the incomeis treated as the income of such beneficiaries,members or participants under the tax law of the

first-mentioned Contracting State or the statewhere the entity is organised.

(d) an item of income:

(i) derived from a Contracting State through anentity that is organised in a state otherthan the Contracting States; and

(ii) treated as the income of that entity underthe tax law of the other Contracting State,

shall not be eligible for the benefits of theConvention.

(e) an item of income:

(i) derived from a Contracting State through anentity that is organised in that ContractingState; and

(ii) treated as the income of that entity underthe tax law of the other Contracting State,

shall not be eligible for the benefits of theConvention.

Article 5PERMANENT ESTABLISHMENT

1. For the purposes of this Convention, the termpermanent establishment means a fixed place of businessthrough which the business of an enterprise is wholly orpartly carried on.

2. The term permanent establishment includesespecially:


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(a) a place of management;

(b) a branch;

(c) an office;

(d) a factory;

(e) a workshop; and

(f) a mine, an oil or gas well, a quarry or any otherplace of extraction of natural resources.

3. A building site or construction or installationproject constitutes a permanent establishment only if it

lasts more than twelve months.

4. Notwithstanding the provisions of paragraphs 1, 2 and3, an enterprise shall be deemed to have a permanentestablishment in a Contracting State and to carry onbusiness through that permanent establishment if, for aperiod or periods exceeding in the aggregate 90 days in anytwelve month period, it carries on activities (includingthe operation of substantial equipment) in that ContractingState which consist of, or which are connected with, theexploration for or the exploitation of natural resources,including standing timber, situated in that Contracting

State.

5. Notwithstanding the provisions of paragraphs 1, 2 and3, where an enterprise of a Contracting State performsservices in the other Contracting State:

(a) through an individual who is present in thatother Contracting State for a period or periodsexceeding in the aggregate 183 days in any twelvemonth period, and more than 50 per cent of thegross revenues attributable to active businessactivities of the enterprise during this periodor periods are derived from the servicesperformed in that other Contracting State throughthat individual, or

(b) for a period or periods exceeding in theaggregate 183 days in any twelve month period,and these services are performed for the sameproject or for connected projects through one ormore individuals who are present and performingsuch services in that other Contracting State,


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the activities carried on in that other Contracting Statein performing these services shall be deemed to be carried

on through a permanent establishment of the enterprisesituated in that other Contracting State, unless theseservices are limited to those mentioned in paragraph 7which, if performed through a fixed place of business,would not make the fixed place of business a permanentestablishment under the provisions of that paragraph. Forthe purposes of this paragraph, services performed by anindividual on behalf of one enterprise shall not beconsidered to be performed by another enterprise throughthat individual unless that other enterprise supervises,directs or controls the manner in which these services areperformed by the individual.

6. (a) The duration of activities under paragraphs 3, 4and 5 shall be determined by aggregating theperiods during which activities are carried on ina Contracting State by associated enterprisesprovided that the activities carried on in thatContracting State by an enterprise are connectedwith the activities carried on in thatContracting State by its associated enterprise.

(b) The period during which two or more associatedenterprises are carrying on concurrent activitiesshall be counted only once for the purpose of

determining the duration of activities.

(c) For the purposes of this Article, an enterpriseshall be deemed to be associated with anotherenterprise if:

(i) an enterprise participates directly orindirectly in the management, control orcapital of the other enterprise; or

(ii) the same persons participate directly orindirectly in the management, control orcapital of the enterprises.

7. Notwithstanding the preceding provisions of thisArticle, the term permanent establishment shall be deemednot to include:

(a) the use of facilities solely for the purpose ofstorage, display or delivery of goods ormerchandise belonging to the enterprise;

(b) the maintenance of a stock of goods ormerchandise belonging to the enterprise solelyfor the purpose of storage, display or delivery;


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(c) the maintenance of a stock of goods ormerchandise belonging to the enterprise solely

for the purpose of processing by anotherenterprise;

(d) the maintenance of a fixed place of businesssolely for the purpose of purchasing goods ormerchandise or of collecting information, for theenterprise;

(e) the maintenance of a fixed place of businesssolely for the purpose of carrying on, for theenterprise, any other activity of a preparatoryor auxiliary character;

(f) the maintenance of a fixed place of businesssolely for any combination of activitiesmentioned in subparagraphs (a) to (e), providedthat the overall activity of the fixed place ofbusiness resulting from this combination is of apreparatory or auxiliary character.

8. Notwithstanding the provisions of paragraphs 1 and 2,where a person other than an agent of an independentstatus to whom the provisions of paragraph 9 apply isacting on behalf of an enterprise and:

(a) has, and habitually exercises, in a ContractingState an authority to conclude contracts in thename of the enterprise; or

(b) manufactures or processes in a Contracting Statefor the enterprise goods or merchandise belongingto the enterprise which participates in themanagement, control or capital of the person, andany of those goods or merchandise are sold to aresident of that Contracting State,

that enterprise shall be deemed to have a permanentestablishment in that Contracting State in respect of anyactivities which that person undertakes for the enterprise,unless the activities of such person are limited to thosementioned in paragraph 7 which, if exercised through afixed place of business, would not make this fixed place ofbusiness a permanent establishment under the provisions ofthat paragraph.


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9. An enterprise shall not be deemed to have a permanentestablishment in a Contracting State merely because it

carries on business in that Contracting State through abroker, general commission agent or any other agent of anindependent status, provided that such persons are actingin the ordinary course of their business.

10. The fact that a company which is a resident of aContracting State controls or is controlled by a companywhich is a resident of the other Contracting State, orwhich carries on business in that other Contracting State(whether through a permanent establishment or otherwise),shall not of itself constitute either company a permanentestablishment of the other.

Article 6INCOME FROM IMMOVABLE PROPERTY

1. Income derived by a resident of a Contracting Statefrom immovable property (including income from agriculture,forestry or fishing) situated in the other ContractingState may be taxed in that other Contracting State.

2. The term immovable property shall have the meaningwhich it has under the law of the Contracting State inwhich the property in question is situated. The term shallin any case include property accessory to immovable

property, livestock and equipment used in agriculture andforestry, rights to which the provisions of general lawrespecting immovable property apply, usufruct of immovableproperty, rights to explore for or exploit naturalresources or standing timber, and rights to variable orfixed payments either as consideration for or in respect ofthe exploration for or the exploitation of, or the right toexplore for or exploit, natural resources or standingtimber; ships and aircraft shall not be regarded asimmovable property.

3. The provisions of paragraph 1 shall apply to incomederived from the direct use, letting, or use in any otherform of immovable property.

4. The provisions of paragraphs 1 and 3 shall also applyto the income from immovable property of an enterprise.

5. Any right referred to in paragraph 2 shall be regardedas situated where the property to which it relates issituated or where the exploration or exploitation may takeplace.


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Article 7BUSINESS PROFITS

1. The profits of an enterprise of a Contracting Stateshall be taxable only in that Contracting State unless theenterprise carries on business in the other ContractingState through a permanent establishment situated therein.If the enterprise carries on business as aforesaid, theprofits of the enterprise may be taxed in that otherContracting State but only so much of them as isattributable to that permanent establishment.

2. Subject to the provisions of paragraph 3, where anenterprise of a Contracting State carries on business inthe other Contracting State through a permanent

establishment situated therein, there shall in eachContracting State be attributed to that permanentestablishment the profits which it might be expected tomake if it were a distinct and separate enterprise engagedin the same or similar activities under the same or similarconditions and dealing wholly independently with theenterprise of which it is a permanent establishment.

3. In determining the profits of a permanentestablishment, there shall be allowed as deductionsexpenses which are incurred for the purposes of thepermanent establishment, including executive and general

administrative expenses so incurred, whether in theContracting State in which the permanent establishment issituated or elsewhere.

4. No profits shall be attributed to a permanentestablishment by reason of the mere purchase by thatpermanent establishment of goods or merchandise for theenterprise.

5. For the purposes of the preceding paragraphs of thisArticle, the profits to be attributed to the permanentestablishment shall be determined by the same method yearby year unless there is good and sufficient reason to thecontrary.

6. Where:

(a) a resident of a Contracting State is beneficiallyentitled, whether directly or through one or moreinterposed trusts, to a share of the profitsderived from business carried on in the otherContracting State by the trustee of a trust(other than a trust which is treated as a companyfor tax purposes) in its capacity as trustee; and


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(b) in relation to the carrying on of the business,that trustee, in accordance with the principles

stated in Article 5, has a permanentestablishment in that other Contracting State,

the business carried on by the trustee shall be deemed tobe a business carried on in that other Contracting State bythat resident through a permanent establishment situatedtherein and the share of the profits shall be attributed tothat permanent establishment.

7. Where profits include items of income which are dealtwith separately in other Articles of this Convention, thenthe provisions of those Articles shall not be affected bythe provisions of this Article.

8. Notwithstanding the other provisions of this Article,an enterprise of a Contracting State that derives incomefrom any form of insurance, other than life insurance, inthe form of premiums paid for the insurance of riskssituated in that other Contracting State, may be taxed onsuch income in the other Contracting State in accordancewith the laws of that other Contracting State which are inforce on the date of signature of this Convention, or aresubstantially similar in general principle to any suchprovision but are enacted and have effect after the date ofsignature of the Convention.

Article 8SHIPPING AND AIR TRANSPORT

1. Profits from the operation of ships or aircraft ininternational traffic carried on by an enterprise of aContracting State shall be taxable only in that ContractingState.

2. Notwithstanding the provisions of Article 2, providedthat no political subdivision or local authority of NewZealand levies a tax similar to the local inhabitant taxesor the enterprise tax in Japan in respect of the operationof ships or aircraft in international traffic carried on byan enterprise of Japan, an enterprise of New Zealand shallbe exempt from the local inhabitant taxes and theenterprise tax in Japan in respect of the operation ofships or aircraft in international traffic.


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3. Notwithstanding the provisions of paragraph 1, profitsreferred to in that paragraph which are derived by an

enterprise of a Contracting State from carriage by ship oraircraft of passengers, livestock, mail, goods ormerchandise which are shipped or embarked in the otherContracting State and are discharged at a place in thatother Contracting State may be taxed in that otherContracting State.

4. The provisions of paragraphs 1, 2 and 3 shall alsoapply to profits from the participation in a pool, a jointbusiness or an international operating agency.

Article 9ASSOCIATED ENTERPRISES

1. Where

(a) an enterprise of a Contracting State participatesdirectly or indirectly in the management, controlor capital of an enterprise of the otherContracting State, or

(b) the same persons participate directly orindirectly in the management, control or capitalof an enterprise of a Contracting State and anenterprise of the other Contracting State,

and in either case conditions are made or imposed betweenthe two enterprises in their commercial or financialrelations which differ from those which would be madebetween independent enterprises, then any profits whichwould, but for those conditions, have accrued to one of theenterprises, but, by reason of those conditions, have notso accrued, may be included in the profits of thatenterprise and taxed accordingly.

2. Where a Contracting State includes in the profits ofan enterprise of that Contracting State - and taxesaccordingly - profits on which an enterprise of the otherContracting State has been charged to tax in that otherContracting State and the profits so included are profitswhich would have accrued to the enterprise of the first-mentioned Contracting State if the conditions made betweenthe two enterprises had been those which would have beenmade between independent enterprises, then that otherContracting State shall make an appropriate adjustment tothe amount of the tax charged therein on those profits. Indetermining such adjustment, due regard shall be had to theother provisions of this Convention and the competentauthorities of the Contracting States shall if necessaryconsult each other.


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3. Notwithstanding the provisions of paragraph 1, aContracting State shall not change the profits of an

enterprise of that Contracting State in the circumstancesreferred to in that paragraph after ten years from the endof the taxable year in which the profits that would besubjected to such change would, but for the conditionsreferred to in that paragraph, have accrued to thatenterprise. The provisions of this paragraph shall notapply in the case of fraud or wilful default.

Article 10DIVIDENDS

1. Dividends paid by a company which is a resident of aContracting State to a resident of the other Contracting

State may be taxed in that other Contracting State.

2. However, such dividends may also be taxed in theContracting State of which the company paying the dividendsis a resident and according to the laws of that ContractingState, but if the beneficial owner of the dividends is aresident of the other Contracting State, the tax so chargedshall not exceed 15 per cent of the gross amount of thedividends.

3. Notwithstanding the provisions of paragraph 2,dividends shall not be taxed in the Contracting State of

which the company paying the dividends is a resident if thebeneficial owner of the dividends is a resident of theother Contracting State and is a company that has owneddirectly or indirectly, for the period of six months endingon the date on which entitlement to the dividends isdetermined, at least 10 per cent of the voting power of thecompany paying the dividends and the company that is thebeneficial owner of the dividends:

(a) is a qualified person by reason of the provisionsof subparagraph (c) of paragraph 2 of Article 22;

(b) has at least 50 per cent of its voting power inthe aggregate owned directly or indirectly byfive or fewer companies referred to insubparagraph (a); or

(c) is granted benefits with respect to thosedividends under paragraph 5 of Article 22.

4. The provisions of paragraphs 2 and 3 shall not affectthe taxation of the company in respect of the profits outof which the dividends are paid.


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5. The provisions of paragraph 3 shall not apply in thecase of dividends paid by a company which is entitled to a

deduction for dividends paid to its beneficiaries incomputing its taxable income in the Contracting State ofwhich the company is a resident.

6. The term dividends as used in this Article meansincome from shares or other rights, not being debt-claims,participating in profits, as well as income which issubjected to the same taxation treatment as income fromshares by the tax laws of the Contracting State of whichthe company making the distribution is a resident.

7. The provisions of paragraphs 1, 2 and 3 shall notapply if the beneficial owner of the dividends, being a

resident of a Contracting State, carries on business in theother Contracting State of which the company paying thedividends is a resident through a permanent establishmentsituated therein and the holding in respect of which thedividends are paid is effectively connected with suchpermanent establishment. In such case the provisions ofArticle 7 shall apply.

8. Where a company which is a resident of a ContractingState derives profits or income from the other ContractingState, that other Contracting State may not impose any taxon the dividends paid by the company, except insofar as

such dividends are paid to a resident of that otherContracting State or insofar as the holding in respect ofwhich the dividends are paid is effectively connected witha permanent establishment situated in that otherContracting State, nor subject the companys undistributedprofits to a tax on the companys undistributed profits,even if the dividends paid or the undistributed profitsconsist wholly or partly of profits or income arising insuch other Contracting State.

Article 11INTEREST

1. Interest arising in a Contracting State and paid to aresident of the other Contracting State may be taxed inthat other Contracting State.

2. However, such interest may also be taxed in theContracting State in which it arises and according to thelaws of that Contracting State, but if the beneficial ownerof the interest is a resident of the other ContractingState, the tax so charged shall not exceed 10 per cent ofthe gross amount of the interest.


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3. Notwithstanding the provisions of paragraph 2,interest arising in a Contracting State shall be taxable

only in the other Contracting State if:

(a) the interest is beneficially owned by theGovernment of that other Contracting State, apolitical subdivision or local authority thereof,or the central bank of that other ContractingState or any institution wholly owned by thatGovernment;

(b) the interest is beneficially owned by a residentof that other Contracting State with respect todebt-claims guaranteed, insured or indirectlyfinanced by the Government of that other

Contracting State, a political subdivision orlocal authority thereof, or the central bank ofthat other Contracting State or any institutionwholly owned by that Government; or

(c) the interest is beneficially owned by a residentof the other Contracting State that is afinancial institution that is unrelated to anddealing wholly independently with the payer. Forthe purposes of this Article, the term financialinstitution means a bank or other enterprisesubstantially deriving its profits by raising

debt finance in the financial markets or bytaking deposits at interest and using those fundsin carrying on a business of providing finance.

4. For the purposes of paragraph 3, the terms thecentral bank and institution wholly owned by thatGovernment mean:


(i) the Bank of Japan;

(ii) the Japan Bank for InternationalCooperation;

(iii) the Japan International Cooperation Agency;and

(iv) the Nippon Export and Investment Insurance;


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the Reserve Bank of New Zealand;

(c) such other similar institution the capital ofwhich is wholly owned by the Government of aContracting State as may be agreed upon from timeto time between the Governments of the ContractingStates through an exchange of diplomatic notes.

5. Notwithstanding paragraph 3, interest referred to insubparagraph (c) of that paragraph may be taxed in theContracting State in which it arises at a rate notexceeding 10 per cent of the gross amount of the interest

if:

(a) in the case of interest arising in New Zealand,it is paid by a person that has not paid approvedissuer levy in respect of the interest. Thissubparagraph (a) shall not apply if New Zealanddoes not have an approved issuer levy, or thepayer of the interest is not eligible to elect topay the approved issuer levy, or if the rate ofthe approved issuer levy payable in respect ofsuch interest exceeds two percent of the grossamount of the interest. For the purposes of this

Article, approved issuer levy includes anyidentical or substantially similar charge payableby the payer of interest arising in New Zealandenacted after the date of signature of thisConvention in place of approved issuer levy; or

(b) it is paid as part of an arrangement involvingback-to-back loans or other arrangement that iseconomically equivalent and intended to have asimilar effect to an arrangement involving back-to-back loans.


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6. The term interest as used in this Article meansincome from debt-claims of every kind, whether or not

secured by mortgage and whether or not carrying a right toparticipate in the debtors profits, and in particular,income from government securities and income from bonds ordebentures, including premiums and prizes attaching to suchsecurities, bonds or debentures, and all other income thatis subjected to the same taxation treatment as income frommoney lent by the tax laws of the Contracting State inwhich the income arises. Income dealt with in Article 10shall not be regarded as interest for the purposes of thisConvention.

7. The provisions of paragraphs 1, 2 and 3 shall notapply if the beneficial owner of the interest, being a

resident of a Contracting State, carries on business in theother Contracting State in which the interest arisesthrough a permanent establishment situated therein and thedebt-claim in respect of which the interest is paid iseffectively connected with such permanent establishment.In such case the provisions of Article 7 shall apply.

8. Interest shall be deemed to arise in a ContractingState when the payer is a resident of that ContractingState. Where, however, the person paying the interest,whether the person is a resident of a Contracting State ornot, has in a Contracting State a permanent establishment

in connection with which the indebtedness on which theinterest is paid was incurred, and such interest is borneby such permanent establishment, then such interest shallbe deemed to arise in the Contracting State in which thepermanent establishment is situated.

9. Where, by reason of a special relationship between thepayer and the beneficial owner or between both of them andsome other person, the amount of the interest, havingregard to the debt-claim for which it is paid, exceeds theamount which would have been agreed upon by the payer andthe beneficial owner in the absence of such relationship,the provisions of this Article shall apply only to thelast-mentioned amount. In such case, the excess part ofthe payments shall remain taxable according to the laws ofeach Contracting State, due regard being had to the otherprovisions of this Convention.

Article 12ROYALTIES

1. Royalties arising in a Contracting State and paid to aresident of the other Contracting State may be taxed inthat other Contracting State.


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2. However, such royalties may also be taxed in theContracting State in which they arise, and according to the

laws of that Contracting State, but if the beneficial ownerof the royalties is a resident of the other ContractingState, the tax so charged shall not exceed 5 per cent ofthe gross amount of the royalties.

3. The term royalties as used in this Article meanspayments of any kind received as a consideration for:

(a) the use of, or the right to use, any copyright,patent, design or model, plan, secret formula orprocess, trademark or other like property orright;

(b) the supply of scientific, technical, industrialor commercial knowledge or information;

(c) the supply of any assistance that is ancillaryand subsidiary to, and is furnished as a means ofenabling the application or enjoyment of, anysuch property or right as is mentioned insubparagraph (a) or any such knowledge orinformation as is mentioned in subparagraph (b);or

(d) total or partial forbearance in respect of the

use or supply of any property or right referredto in this paragraph.

4. The provisions of paragraphs 1 and 2 shall not applyif the beneficial owner of the royalties, being a residentof a Contracting State, carries on business in the otherContracting State in which the royalties arise through apermanent establishment situated therein and the right orproperty in respect of which the royalties are paid iseffectively connected with such permanent establishment.In such case the provisions of Article 7 shall apply.

5. Royalties shall be deemed to arise in a ContractingState when the payer is a resident of that ContractingState. Where, however, the person paying the royalties,whether the person is a resident of a Contracting State ornot, has in a Contracting State a permanent establishmentin connection with which the liability to pay the royaltieswas incurred, and the royalties are borne by such permanentestablishment, then the royalties shall be deemed to arisein the Contracting State in which the permanentestablishment is situated.


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6. Where, by reason of a special relationship between thepayer and the beneficial owner or between both of them and

some other person, the amount of the royalties, havingregard to what they are paid for, exceeds the amount whichwould have been agreed upon by the payer and the beneficialowner in the absence of such relationship, the provisionsof this Article shall apply only to the last-mentionedamount. In such case, the excess part of the paymentsshall remain taxable according to the laws of eachContracting State, due regard being had to the otherprovisions of this Convention.

Article 13ALIENATION OF PROPERTY

1. Income, profits or gains derived by a resident of aContracting State from the alienation of immovable propertyreferred to in Article 6 and situated in the otherContracting State may be taxed in that other ContractingState.

2. Income, profits or gains derived by a resident of aContracting State from the alienation of shares orinterests in a company, partnership or trust deriving atleast 50 per cent of the value of its property directly orindirectly from immovable property referred to in Article 6and situated in the other Contracting State may be taxed in

that other Contracting State, unless the relevant class ofthe shares or the interests is traded on a recognised stockexchange specified in subparagraph (c) of paragraph 6 ofArticle 22 and the resident and persons related orconnected to that resident own in the aggregate 5 per centor less of that class of the shares or the interests.

3. Where

(a) the Government of Japan (including the DepositInsurance Corporation of Japan) provides,pursuant to the laws of Japan concerning failureresolution involving imminent insolvency offinancial institutions, substantial financialassistance to a financial institution that is aresident of Japan; and

(b) a resident of New Zealand acquires shares in thefinancial institution from the Government ofJapan,

gains derived by the resident of New Zealand from thealienation of such shares may be taxed in Japan, providedthat the alienation is made within five years from thefirst date on which such financial assistance was provided.


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4. Income, profits or gains from the alienation of anyproperty, other than immovable property, forming part of

the business property of a permanent establishment which anenterprise of a Contracting State has in the otherContracting State, including such income, profits or gainsfrom the alienation of such a permanent establishment(alone or with the whole enterprise), may be taxed in thatother Contracting State.

5. Income, profits or gains derived by an enterprise of aContracting State from the alienation of ships or aircraftoperated by that enterprise in international traffic, orany property, other than immovable property, pertaining tothe operation of such ships or aircraft shall be taxableonly in that Contracting State.

6. Income, profit or gains from the alienation of anyproperty other than that referred to in the precedingparagraphs of this Article shall be taxable only in theContracting State of which the alienator is a resident.

Article 14INCOME FROM EMPLOYMENT

1. Subject to the provisions of Articles 15, 17 and 18,salaries, wages and other similar remuneration derived by aresident of a Contracting State in respect of an employment

shall be taxable only in that Contracting State unless theemployment is exercised in the other Contracting State. Ifthe employment is so exercised, such remuneration as isderived therefrom may be taxed in that other ContractingState.

2. Notwithstanding the provisions of paragraph 1,remuneration derived by a resident of a Contracting Statein respect of an employment exercised in the otherContracting State shall be taxable only in the first-mentioned Contracting State if:

(a) the recipient is present in that otherContracting State for a period or periods notexceeding in the aggregate 183 days in any twelvemonth period commencing or ending in the taxableyear concerned, and

(b) the remuneration is paid by, or on behalf of, anemployer who is not a resident of that otherContracting State, and

(c) the remuneration is not borne by a permanentestablishment which the employer has in thatother Contracting State.


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3. Notwithstanding the preceding provisions of thisArticle, remuneration derived in respect of an employment

exercised aboard a ship or aircraft operated ininternational traffic by an enterprise of a ContractingState may be taxed in that Contracting State.

Article 15DIRECTORS FEES

Directors fees and other similar payments derived bya resident of a Contracting State in that persons capacityas a member of the board of directors of a company which isa resident of the other Contracting State may be taxed inthat other Contracting State.

Article 16ENTERTAINERS AND SPORTSPERSONS

1. Notwithstanding the provisions of Articles 7 and 14,income derived by a resident of a Contracting State as anentertainer, such as a theatre, motion picture, radio ortelevision artiste, or a musician, or as a sportsperson,from that persons personal activities as such exercised inthe other Contracting State, may be taxed in that otherContracting State.

2. Where income in respect of personal activities

exercised by an entertainer or a sportsperson in thatpersons capacity as such accrues not to the entertainer orsportsperson but to another person, that income may,notwithstanding the provisions of Articles 7 and 14, betaxed in the Contracting State in which the activities ofthe entertainer or sportsperson are exercised.

Article 17PENSIONS

Subject to the provisions of paragraph 2 of Article18, pensions and other similar remuneration, includingpayments under the social security legislation of aContracting State, paid to a resident of a ContractingState shall be taxable only in that Contracting State.

Article 18GOVERNMENT SERVICE

1. (a) Salaries, wages and other similar remunerationpaid by a Contracting State or a politicalsubdivision or local authority thereof to anindividual in respect of services rendered tothat Contracting State or political subdivisionor local authority shall be taxable only in that

Contracting State.


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(b) However, such salaries, wages and other similarremuneration shall be taxable only in the other

Contracting State if the services are rendered inthat other Contracting State and the individualis a resident of that other Contracting Statewho:

(i) is a national of that other ContractingState; or

(ii) did not become a resident of that otherContracting State solely for the purpose ofrendering the services.

2. (a) Notwithstanding the provisions of paragraph 1,

pensions and other similar remuneration paid by,or out of funds to which contributions are madeor created by, a Contracting State or a politicalsubdivision or local authority thereof to anindividual in respect of services rendered tothat Contracting State or political subdivisionor local authority shall be taxable only in thatContracting State.

(b) However, such pensions and other similarremuneration shall be taxable only in the otherContracting State if the individual is a resident

of, and a national of, that other ContractingState.

3. The provisions of Articles 14, 15, 16 and 17 shallapply to salaries, wages, pensions, and other similarremuneration in respect of services rendered in connectionwith a business carried on by a Contracting State or apolitical subdivision or local authority thereof.

Article 19STUDENTS

Payments which a student or business apprentice who isor was immediately before visiting a Contracting State aresident of the other Contracting State and who is presentin the first-mentioned Contracting State solely for thepurpose of that persons education or training receives forthe purpose of that persons maintenance, education ortraining shall not be taxed in the first-mentionedContracting State, provided that such payments arise fromsources outside the first-mentioned Contracting State. Theexemption provided by this Article shall apply to abusiness apprentice only for a period not exceeding oneyear from the date on which the person first begins thatpersons training in the first-mentioned Contracting State.


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Article 20SILENT PARTNERSHIP

Notwithstanding any other provisions of thisConvention, any income and gains derived by a silentpartner in respect of a silent partnership (Tokumei Kumiai)contract or other similar contract may be taxed in theContracting State in which such income and gains arise andaccording to the laws of that Contracting State.

Article 21OTHER INCOME

1. Items of income of a resident of a Contracting State,wherever arising, not dealt with in the foregoing Articles

of this Convention shall be taxable only in thatContracting State.

2. The provisions of paragraph 1 shall not apply toincome, other than income from immovable property asdefined in paragraph 2 of Article 6, if the recipient ofsuch income, being a resident of a Contracting State,carries on business in the other Contracting State througha permanent establishment situated therein and the right orproperty in respect of which the income is paid iseffectively connected with such permanent establishment.In such case the provisions of Article 7 shall apply.

3. Notwithstanding the provisions of paragraphs 1 and 2,items of income of a resident of a Contracting State notdealt with in the foregoing Articles of this Convention andarising in the other Contracting State may also be taxed inthat other Contracting State.

Article 22LIMITATION ON BENEFITS

1. Except as otherwise provided in this Article, aresident of a Contracting State that derives incomedescribed in paragraph 3 of Article 11 or Article 13 fromthe other Contracting State shall be entitled to thebenefits granted for a taxable year by the provisions ofthose paragraphs or Articles only if such resident is aqualified person as defined in paragraph 2 and satisfiesany other specified conditions in those paragraphs orArticles for the obtaining of such benefits.

2. A resident of a Contracting State is a qualifiedperson for a taxable year only if such resident is either:

(a) an individual;


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(b) a qualified governmental entity;

(c) a company, if its principal class of shares islisted or registered on a recognised stockexchange specified in clause (i) or (ii) ofsubparagraph (c) of paragraph 6 and is regularlytraded on one or more recognised stock exchanges;

(d) a pension fund, provided that as of the end ofthe prior taxable year more than 50 per cent ofits beneficiaries, members or participants areindividuals who are residents of eitherContracting State;

(e) an organisation established under the law of that

Contracting State and operated exclusively for areligious, charitable, educational, scientific,artistic, cultural or public purposes, providedthat all or part of its income may be exempt fromtax under the domestic law of that ContractingState; or

(f) a person other than an individual, if residentsof either Contracting State that are qualifiedpersons by reason of subparagraph (a), (b), (c),(d) or (e) of this paragraph own, directly orindirectly, at least 50 per cent of the voting

power or other beneficial interests of theperson.

3. Where the provisions of subparagraph (f) ofparagraph 2 apply:

(a) in respect of taxation by withholding at source,a resident of a Contracting State shall beconsidered to satisfy the conditions described inthat subparagraph for the taxable year in whichpayment of an item of income is made if suchresident satisfies those conditions during thetwelve month period preceding the date of thepayment;

(b) in all other cases, a resident of a ContractingState shall be considered to satisfy theconditions described in that subparagraph for ataxable year if such resident satisfies thoseconditions on at least half the days of thetaxable year.


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4. (a) Notwithstanding that a resident of a ContractingState may not be a qualified person, that

resident shall be entitled to the benefitsgranted by the provisions of paragraph 3 ofArticle 11 or Article 13 with respect to an itemof income described in those paragraphs orArticles derived from the other Contracting Stateif:

(i) the resident is carrying on business in thefirst-mentioned Contracting State (otherthan the business of making or managinginvestments for the residents own account,unless the business is banking, insurance orsecurities business carried on by a bank,

insurance company or securities dealer);

(ii) the income derived from that otherContracting State is derived in connectionwith, or is incidental to, that business;and

(iii) that resident satisfies any other specifiedconditions in those paragraphs or Articlesfor the obtaining of such benefits.

(b) If a resident of a Contracting State derives an

item of income from a business carried on by thatresident in the other Contracting State orderives an item of income arising in the otherContracting State from a person that has with theresident a relationship described in subparagraph(a) or (b) of paragraph 1 of Article 9, theconditions described in subparagraph (a) of thisparagraph shall be considered to be satisfiedwith respect to such item of income only if thebusiness carried on in the first-mentionedContracting State is substantial in relation tothe business carried on in that other ContractingState. Whether such business is substantial forthe purpose of this paragraph shall be determinedon the basis of all the facts and circumstances.


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(c) In determining whether a person is carrying onbusiness in a Contracting State under

subparagraph (a) of this paragraph, the businessconducted by a partnership in which that personis a partner and the business conducted bypersons connected to such person shall be deemedto be conducted by such person. A person shallbe connected to another if one owns, directly orindirectly, at least 50 per cent of thebeneficial interests in the other (or, in thecase of a company, at least 50 per cent of thevoting power of the company) or another personowns, directly or indirectly, at least 50 percent of the beneficial interests (or, in the caseof a company, at least 50 per cent of the voting

power of the company) in each person. In anycase, a person shall be considered to beconnected to another if, on the basis of all thefacts and circumstances, one has control of theother or both are under the control of the sameperson or persons.

5. A resident of a Contracting State that is neither aqualified person nor entitled under paragraph 4 to thebenefits granted by the provisions of paragraph 3 ofArticle 11 or Article 13 with respect to an item of incomedescribed in those paragraphs or Articles, or is a company

that is not entitled to the benefits of paragraph 3 ofArticle 10 because the company does not meet therequirements of subparagraphs (a) or (b) of paragraph 3 ofArticle 10, shall nevertheless be granted such benefits ifthe competent authority of the other Contracting Statedetermines, in accordance with its domestic law oradministrative practice, that the establishment,acquisition or maintenance of such resident and the conductof its operations are considered as not having theobtaining of such benefits as one of the principalpurposes.

6. For the purposes of this Article:

(a) the term qualified governmental entity meansthe Government of a Contracting State, anypolitical subdivision or local authority thereof,the Bank of Japan, the Reserve Bank of NewZealand or a person that is wholly owned,directly or indirectly, by the Government of aContracting State or a political subdivision orlocal authority thereof;


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(b) the term principal class of shares means theclass or classes of shares of a company which

represent a majority of the voting power of thecompany;

(c) the term recognised stock exchange means:

(i) any stock exchange established by aFinancial Instruments Exchange or anapproved-type financial instruments firmsassociation under the terms of the FinancialInstruments and Exchange Law (Law No. 25 of1948) of Japan;

(ii) the securities markets (other than the New

Zealand Debt Market) operated by the NewZealand Exchange Limited and any other NewZealand securities exchange recognised underthe laws of New Zealand; and

(iii) any other stock exchange which the competentauthorities of the Contracting States agreeto recognise for the purposes of thisArticle; and

(d) the term pension fund means any person that:

(i) is established under the law of aContracting State; and

(ii) is operated principally to administer orprovide pensions, retirement benefits orother similar remuneration or to earn incomefor the benefit of other pension funds.

Article 23LIMITATION OF RELIEF

No relief shall be available under this Convention ifit was the main purpose of any person concerned with thecreation or assignment of any right or property in respectof which the income is paid or derived to take advantage ofthe Convention by means of that creation or assignment.


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Article 24ELIMINATION OF DOUBLE TAXATION

1. Subject to the provisions of the laws of Japanregarding the allowance as a credit against Japanese tax oftax payable in any country other than Japan, where aresident of Japan derives income from New Zealand which maybe taxed in New Zealand in accordance with the provisionsof this Convention, the amount of New Zealand tax payablein respect of that income shall be allowed as a creditagainst the Japanese tax imposed on that resident. Theamount of credit, however, shall not exceed that part ofthe Japanese tax which is appropriate to that income.

2. Subject to the provisions of the laws of New Zealand

which relate to the allowance of a credit against NewZealand tax of tax paid in a country outside New Zealand(which shall not affect the general principle of thisArticle), Japanese tax paid under the laws of Japan andconsistent with this Convention, in respect of incomederived by a resident of New Zealand from sources in Japan(excluding, in the case of a dividend, tax paid in respectof the profits out of which the dividend is paid) shall beallowed as a credit against New Zealand tax payable inrespect of that income.

Article 25

NON-DISCRIMINATION

1. Nationals of a Contracting State shall not besubjected in the other Contracting State to any taxation orany requirement connected therewith, which is other or moreburdensome than the taxation and connected requirements towhich nationals of that other Contracting State in the samecircumstances, in particular with respect to residence, areor may be subjected. The provisions of this paragraphshall, notwithstanding the provisions of Article 1, alsoapply to persons who are not residents of one or both ofthe Contracting States.

2. The taxation on a permanent establishment which anenterprise of a Contracting State has in the otherContracting State shall not be less favourably levied inthat other Contracting State than the taxation levied onenterprises of that other Contracting State carrying on thesame activities in similar circumstances. The provisionsof this paragraph shall not be construed as obliging aContracting State to grant to individuals who are residentsof the other Contracting State any personal allowances,reliefs and reductions for taxation purposes on account ofcivil status or family responsibilities which it grants toits own residents.


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3. Except where the provisions of paragraph 1 of Article9, paragraph 9 of Article 11 or paragraph 6 of Article 12

apply, interest, royalties and other disbursements paid byan enterprise of a Contracting State to a resident of theother Contracting State shall, for the purposes ofdetermining the taxable profits of such enterprise, bedeductible under the same conditions as if they had beenpaid to a resident of the first-mentioned ContractingState.

4. Enterprises of a Contracting State, the capital ofwhich is wholly or partly owned or controlled, directly orindirectly, by one or more residents of the otherContracting State, shall not be subjected in the first-mentioned Contracting State to any taxation or any

requirement connected therewith which is other or moreburdensome than the taxation and connected requirements towhich other similar enterprises of the first-mentionedContracting State in similar circumstances are or may besubjected.

5. The provisions of this Article shall, notwithstandingthe provisions of Article 2, apply to taxes of every kindand description imposed by a Contracting State or apolitical subdivision or local authority thereof.

Article 26

MUTUAL AGREEMENT PROCEDURE

1. Where a person considers that the actions of one orboth of the Contracting States result or will result forthat person in taxation not in accordance with theprovisions of this Convention, that person may,irrespective of the remedies provided by the domestic lawof those Contracting States, present a case to thecompetent authority of the Contracting State of which theperson is a resident or, if that persons case comes underparagraph 1 of Article 25, to that of the Contracting Stateof which that person is a national. The case must bepresented within three years from the first notification ofthe action resulting in taxation not in accordance with theprovisions of the Convention.

2. The competent authority shall endeavour, if theobjection appears to it to be justified and if it is notitself able to arrive at a satisfactory solution, toresolve the case by mutual agreement with the competentauthority of the other Contracting State, with a view tothe avoidance of taxation which is not in accordance withthe provisions of this Convention. Any agreement reachedshall be implemented notwithstanding any time limits in thedomestic law of the Contracting States.


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3. The competent authorities of the Contracting Statesshall endeavour to resolve by mutual agreement any

difficulties or doubts arising as to the interpretation orapplication of this Convention. They may also consulttogether for the elimination of double taxation in casesnot provided for in the Convention.

4. The competent authorities of the Contracting Statesmay communicate with each other directly, including througha joint commission consisting of themselves or theirrepresentatives, for the purpose of reaching an agreementin the sense of the preceding paragraphs of this Article.

5. Where,

(a) under paragraph 1, a person has presented a caseto the competent authority of a Contracting Stateon the basis that the actions of one or both ofthe Contracting States have resulted for thatperson in taxation not in accordance with theprovisions of this Convention, and

(b) the competent authorities are unable to reach anagreement to resolve that case pursuant toparagraph 2 within two years from thepresentation of the case to the competentauthority of the other Contracting State,

any unresolved issues arising from the case shall besubmitted to arbitration if the person so requests. Theseunresolved issues shall not, however, be submitted toarbitration if a decision on these issues has already beenrendered by a court or administrative tribunal of eitherContracting State. Unless a person directly affected bythe case does not accept the mutual agreement thatimplements the arbitration decision, that decision shall bebinding on both Contracting States and shall be implementednotwithstanding any time limits in the domestic laws ofthese Contracting States. The competent authorities of theContracting States shall by mutual agreement settle themode of application of this paragraph.


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Article 27EXCHANGE OF INFORMATION

1. The competent authorities of the Contracting Statesshall exchange such information as is foreseeably relevantfor carrying out the provisions of this Convention or tothe administration or enforcement of the domestic lawsconcerning taxes of every kind and description imposed onbehalf of the Contracting States, or of their politicalsubdivisions or local authorities, insofar as the taxationthereunder is not contrary to the Convention. The exchangeof information is not restricted by Articles 1 and 2.

2. Any information received under paragraph 1 by aContracting State shall be treated as secret in the same

manner as information obtained under the domestic laws ofthat Contracting State and shall be disclosed only topersons or authorities (including courts and administrativebodies) concerned with the assessment or collection of, theenforcement or prosecution in respect of, the determinationof appeals in relation to the taxes referred to inparagraph 1, or the oversight of the above. Such personsor authorities shall use the information only for suchpurposes. They may disclose the information in publiccourt proceedings or in judicial decisions.

3. In no case shall the provisions of paragraphs 1 and 2

be construed so as to impose on a Contracting State theobligation:

(a) to carry out administrative measures at variancewith the laws and administrative practice of thator of the other Contracting State;

(b) to supply information which is not obtainableunder the laws or in the normal course of theadministration of that or of the otherContracting State;

(c) to supply information which would disclose anytrade, business, industrial, commercial orprofessional secret or trade process, orinformation, the disclosure of which would becontrary to public policy.


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4. If information is requested by a Contracting State inaccordance with this Article, the other Contracting State

shall use its information gathering measures to obtain therequested information, even though that other ContractingState may not need such information for its own taxpurposes. The obligation contained in the precedingsentence is subject to the limitations of paragraph 3 butin no case shall such limitations be construed to permit aContracting State to decline to supply information solelybecause it has no domestic interest in such information.

5. In no case shall the provisions of paragraph 3 beconstrued to permit a Contracting State to decline tosupply information solely because the information is heldby a bank, other financial institution, nominee or person

acting in an agency or a fiduciary capacity or because itrelates to ownership interests in a person.

Article 28ASSISTANCE IN THE COLLECTION OF TAXES

1. The Contracting States shall lend assistance to eachother in the collection of revenue claims. This assistanceis not restricted by Articles 1 and 2.

2. The term revenue claim as used in this Article meansan amount owed in respect of the taxes covered by Article 2

and in addition, the following taxes imposed by theContracting States, insofar as the taxation thereunder isnot contrary to this Convention or any other instrument towhich the Contracting States are parties, as well asinterest, administrative penalties and costs of collectionor conservancy related to such amount:


(i) the consumption tax;

(ii) the inheritance tax; and

(iii) the gift tax;


the goods and services tax.


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3. When a revenue claim of a Contracting State isenforceable under the laws of that Contracting State and is

owed by a person who, at that time, cannot, under the lawsof that Contracting State, prevent its collection, thatrevenue claim shall, at the request of the competentauthority of that Contracting State, be accepted forpurposes of collection by the competent authority of theother Contracting State. That revenue claim shall becollected by that other Contracting State in accordancewith the provisions of its laws applicable to theenforcement and collection of its own taxes as if therevenue claim were a revenue claim of that otherContracting State that met the conditions allowing thatother Contracting State to make a request under thisparagraph.

4. When a revenue claim of a Contracting State is a claimin respect of which that Contracting State may, under itslaw, take measures of conservancy with a view to ensure itscollection, that revenue claim shall, at the request of thecompetent authority of that Contracting State, be acceptedfor purposes of taking measures of conservancy by thecompetent authority of the other Contracting State. Thatother Contracting State shall take measures of conservancyin respect of that revenue claim in accordance with theprovisions of its laws as if the revenue claim were arevenue claim of that other Contracting State even if, at

the time when such measures are applied, the revenue claimis not enforceable in the first-mentioned Contracting Stateor is owed by a person who has a right to prevent itscollection.

5. Notwithstanding the provisions of paragraphs 3 and 4,a revenue claim accepted by a Contracting State forpurposes of paragraph 3 or 4 shall not, in that ContractingState, be subject to the time limits or accorded anypriority applicable to a revenue claim under the laws ofthat Contracting State by reason of its nature as such. Inaddition, a revenue claim accepted by a Contracting Statefor the purposes of paragraph 3 or 4 shall not, in thatContracting State, have any priority applicable to thatrevenue claim under the laws of the other ContractingState.


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6. Notwithstanding the provisions of paragraph 5, actscarried out by a Contracting State in the collection of a

revenue claim accepted by that Contracting State forpurposes of paragraph 3 or 4, which, if they were carriedout by the other Contracting State, would have the effectof suspending or interrupting the time limits applicable tothe revenue claim according to the laws of that otherContracting State, shall have such effect under the laws ofthat other Contracting State. The first-mentionedContracting State shall inform the other Contracting Stateabout such acts.

7. Proceedings with respect to the existence, validity orthe amount of a revenue claim of a Contracting State shallnot be brought before the courts or administrative bodies

of the other Contracting State.

8. Where, at any time after a request has been made by aContracting State under paragraph 3 or 4 and before theother Contracting State has collected and remitted therelevant revenue claim to the first-mentioned ContractingState, the relevant revenue claim ceases to be

(a) in the case of a request under paragraph 3, arevenue claim of the first-mentioned ContractingState that is enforceable under the laws of thatContracting State and is owed by a person who, at

that time, cannot, under the laws of thatContracting State, prevent its collection, or

(b) in the case of a request under paragraph 4, arevenue claim of the first-mentioned ContractingState in respect of which that Contracting Statemay, under its laws, take measures of conservancywith a view to ensure its collection

the competent authority of the first-mentioned ContractingState shall promptly notify the competent authority of theother Contracting State of that fact and, at the option ofthe other Contracting State, the first-mentionedContracting State shall either suspend or withdraw itsrequest.

9. In no case shall the provisions of this Article beconstrued so as to impose on a Contracting State theobligation:

(a) to carry out administrative measures at variancewith the laws and administrative practice of thator of the other Contracting State;


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(b) to carry out measures which would be contrary topublic policy;

(c) to provide assistance if the other ContractingState has not pursued all reasonable measures ofcollection or conservancy, as the case may be,available under its laws or administrativepractice;

(d) to provide assistance in those cases where theadministrative burden for that Contracting Stateis clearly disproportionate to the benefit to bederived by the other Contracting State.

10. Before assistance is lent under the provisions of this

Article, the competent authorities of both ContractingStates shall agree upon the mode of application of thisArticle, including an agreement to ensure comparable levelsof assistance to each of the Contracting States. Inparticular, the competent authorities of both ContractingStates shall agree on a limit to the number of applicationsfor assistance that a Contracting State may make in aparticular year, as well as a minimum monetary thresholdfor a revenue claim for which assistance is sought, andprocedural rules related to the remittance of amountscollected pursuant to the provisions of this Article.

Article 29MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS

Nothing in this Convention shall affect the fiscalprivileges of members of diplomatic missions or consularposts under the general rules of international law or underthe provisions of special agreements.

Article 30HEADINGS

The headings of the Articles of this Convention areinserted for convenience of reference only and shall notaffect the interpretation of the Convention.

Article 31ENTRY INTO FORCE

1. This Convention shall be approved in accordance withthe legal procedures of each of the Contracting States andshall enter into force on the thirtieth day after the dateof exchange of diplomatic notes indicating such approval.


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2. This Convention shall be applicable:


(i) with respect to taxes on income withheld atsource, for amounts taxable on or after 1January in the calendar year next followingthat in which the Convention enters intoforce;

(ii) with respect to taxes on income which arenot withheld at source, as regards incomefor any taxable year beginning on or after 1January in the calendar year next followingthat in which the Convention enters into

force; and

(iii) with respect to other taxes, as regardstaxes for any taxable year beginning on orafter 1 January in the calendar year nextfollowing that in which the Conventionenters into force; and


(i) with respect to taxes on income withheld atsource, for amounts paid or credited on or

after 1 January in the calendar year nextfollowing that in which the Conventionenters into force;

(ii) with respect to taxes on income which arenot withheld at source, for any income yearbeginning on or after 1 April next followingthe date on which the Convention enters intoforce; and

(iii) with respect to other taxes, as regardstaxes for any taxable period beginning on orafter 1 January in the calendar year nextfollowing that in which the Conventionenters into force.


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3. The Convention between Japan and New Zealand for theAvoidance of Double Taxation and the Prevention of Fiscal

Evasion with respect to Taxes on Income signed atWellington on 30 January, 1963, as amended by the Protocolsigned at Wellington on 22 March, 1967 (hereinafter in thisArticle referred to as the prior Convention) shall ceaseto be applicable from the date upon which this Conventionapplies in respect of the taxes to which the Conventionapplies in accordance with the provisions of paragraph 2 ofthis Article.

4. The prior Convention shall terminate on the last dateon which it applies in accordance with the provisions ofthe preceding paragraphs of this Article.

Article 32TERMINATION

This Convention shall remain in force until terminatedby a Contracting State. Either Contracting State mayterminate the Convention, through diplomatic channels, bygiving notice of termination at least six months before theend of any calendar year beginning after the expiry of fiveyears from the date of entry into force of the Convention.In such event, the Convention shall cease to have effect:


(i) with respect to taxes on income withheld atsource, for amounts taxable on or after 1January in the calendar year next followingthat in which the notice is given;

(ii) with respect to taxes on income which arenot withheld at source, as regards incomefor any taxable year beginning on or after 1January in the calendar year next followingthat in which the notice is given; and

(iii) with respect to other taxes, as regardstaxes for any taxable year beginning on orafter 1 January in the calendar year nextfollowing that in which the notice is given;and


(i) with respect to taxes on income withheld atsource, for amounts paid or credited on orafter 1 January in the calendar year nextfollowing that in which the notice is given;


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(ii) with respect to taxes on income which arenot withheld at source, for any income year

beginning on or after 1 April in thecalendar year next following that in whichthe notice of termination is given; and

(iii) with respect to other taxes, as regardstaxes for any taxable period beginning on orafter 1 January in the calendar year nextfollowing that in which the notice is given.

IN WITNESS WHEREOF the undersigned, being dulyauthorised thereto by their respective Governments, havesigned this Convention.

DONE in duplicate at Tokyo this tenth day of December,2012, in the Japanese and English languages, both textsbeing equally authentic.

FOR JAPAN FOR NEW ZEALAND

Mark Sinclair


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Protocol

At the signing of the Convention between Japan and NewZealand for the Avoidance of Double Taxation and thePrevention of Fiscal Evasion with respect to Taxes onIncome (hereinafter referred to as the Convention), Japanand New Zealand have agreed upon the following provisions,which shall form an integral part of the Convention:

1. It is understood that:

(a) Except to the extent provided in subparagraph(b), the Convention shall not affect the taxation

by a Contracting State of its residents (asdetermined under Article 4 of the Convention).

(b) The provisions of subparagraph (a) shall notaffect the benefits conferred by a ContractingState under the Convention in accordance withparagraphs 2 and 3 of Article 9, and Articles 18,19, 24, 25, 26 and 29 of the Convention.

2. With reference to paragraphs 1 and 2 of Article 2 ofthe Convention:

The term Japanese tax or New Zealand tax shall notinclude any amount which represents a penalty or interestimposed under the laws of Japan or New Zealand,respectively, relating to the taxes to which the Conventionapplies.

3. With reference to paragraph 3 of Article 4 of theConvention:

It is understood that the term any other relevantfactors includes:

(a) where the senior day-to-day management is carriedon;

(b) which Contracting States law governs the legalstatus;

(c) where the accounting records are held; and

(d) where business is carried on.



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(a) It is understood that an enterprise of aContracting State shall not be considered to

operate equipment in the other Contracting Statewhere the enterprise leases equipment under alease contract that is solely for the provisionof equipment, including a bareboat leasecontract.

(b) It is understood that the factors of size,quantity or value of equipment or the role ofequipment in income producing activities arerelevant in determining whether the equipment issubstantial on the basis of the facts andcircumstances of each particular case.

(c) It is understood that the term substantialequipment may include oil or drilling rigs,platforms and other structures used in thepetroleum or mining industry.

5. With reference to subparagraph (a) of paragraph 6 ofArticle 7 of the Convention:

It is understood that in the case of Japan the term "atrust which is treated as a company for tax purposes" meansa trust, the trustee of which is subject to tax in respectof profits derived from business carried on by the use of

trust estate.

6. With reference to Articles 10, 11 and 12 of theConvention:

It is understood that in determining, for the purposesof those Articles, whether dividends, interest or royaltiesare beneficially owned by a resident of New Zealand:

(a) dividends, interest or royalties arising in Japanin respect of which a trustee who is a residentof New Zealand is subject to tax in New Zealand;or

(b) dividends arising in Japan in respect of which atrustee who is a resident of New Zealand would besubject to tax in New Zealand but for anapplication of an exemption that appliesgenerally to those dividends under the law of NewZealand,

shall be treated as being beneficially owned by thattrustee.

7. With reference to paragraph 3 of Article 10 of the

Convention:


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If, in any future tax treaty with any other state, New

Zealand should provide more favourable treatment ofdividends with respect to the relevant conditions, NewZealand shall without undue delay inform Japan and shallenter into negotiations with Japan with a view to providingthe same treatment.


It is understood that the term dividends includes,in the case of New Zealand, income in relation to profit-related debentures, substituting debentures and stapleddebt securities as defined in sections FA 2 and FA 2B of

the Income Tax Act 2007 or any substantially similarprovision which is enacted and has effect after the date ofsignature of the Convention.

9. With reference to paragraph 3 and 4 of Article 11 ofthe Convention:

It is understood that the New Zealand Export CreditOffice is a part of the Government of New Zealand.


It is understood that the term arrangement involvingback-to-back loans would cover, inter alia, any kind ofarrangement structured in such a way that a financialinstitution which is a resident of a Contracting Statereceives interest arising in the other Contracting Stateand the financial institution pays an equivalent interestto another person who is a resident of the first-mentionedContracting State and, if it received the interest directlyfrom the other Contracting State, would not be entitled tothe exemption from tax with respect to that interest inthat other Contracting State.

11. With reference to Article 11 of the Convention:

If, in any future tax treaty with any other state, NewZealand should provide more favourable treatment ofinterest derived by financial institutions, New Zealandshall without undue delay inform Japan and shall enter intonegotiations with Japan with a view to providing the sametreatment.


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12. With reference to Articles 11, 12 and 14 of theConvention:

The reference to the term borne by is alsoapplicable to interest, royalties or remuneration that isdeductible in determining the profits attributable to apermanent establishment.

13. With reference to subparagraph (d) of paragraph 3 ofArticle 12 of the Convention:

It is understood that the term forbearance in respectof the use or supply of any property or right applies tocases where the holder of any property or right receives apayment as consideration for not making such property or

right available to another person.


It is understood that paragraph 1 of Article 13 of theConvention shall apply to income, profits or gains derivedby a resident of a Contracting State from the alienation ofthe interests in a partnership or trust to the extent thatthe income, profits or gains is treated for the purposes ofthe taxation laws of the other Contracting State as theincome, profits or gains derived from the alienation ofimmovable property referred to in Article 6 of the

Convention situated in that other Contracting State.


It is confirmed that the provisions of Article 25 ofthe Convention shall not affect the provisions of thetaxation laws of New Zealand concerning:

(a) Subpart FE of the Income Tax Act 2007 which dealswith thin capitalisation;

(b) Section CW 10 of the Income Tax Act 2007 whichdeals with an inter-corporate dividend exemptionfor wholly-owned groups;

(c) Subpart FM of the Income Tax Act 2007 which dealswith consolidated groups;

(d) Section EB 5 of the Income Tax Act 2007 whichdeals with transfers of trading stock within awholly-owned group;

(e) Subpart IC of the Income Tax Act 2007 which dealswith loss offsets between group companies;


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(f) Subpart FO of the Income Tax Act 2007 which dealswith amalgamation of companies; and

(g) Any provision adopted after the date of signatureof the Convention which is substantially similarin purpose or intent to a provision covered bythis paragraph, or is otherwise agreed betweenthe Governments of the Contracting States throughan exchange of diplomatic notes,

provided that any such provision does not allow fordifferent treatment of residents of Japan as compared withthe treatment of residents of any third state.

16. With reference to paragraph 5 of Article 26 of the

Convention:

(a) The competent authorities shall by mutualagreement establish a procedure in order toensure that an arbitration decision will beimplemented within two years from a request forarbitration as referred to in paragraph 5 ofArticle 26 of the Convention unless actions orinaction of a person directly affected by thecase presented pursuant to that paragraph hinderthe resolution of the case or unless thecompetent authorities and that person agree

otherwise.

(b) An arbitration panel shall be established inaccordance with the following rules:

(i) An arbitration panel shall consist of threearbitrators with expertise or experience ininternational tax matters.

(ii) Each competent authority shall appoint onearbitrator. The two arbitrators appointedby the competent authorities shall appointthe third arbitrator who serves as the chairof the arbitration panel in accordance withthe procedures agreed by the competentauthorities.


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(iii) All arbitrators shall not be employees ofthe tax authorities of the Contracting

States, nor have had dealt with the casepresented pursuant to paragraph 1 of Article26 of the Convention in any capacity.Unless otherwise agreed by the competentauthorities of the Contracting States, thethird arbitrator shall not be a national ofeither Contracting State, nor have had thearbitrators usual place of residence ineither Contracting State, nor have beenemployed by either Contracting State.

(iv) The competent authorities shall ensure thatall arbitrators and their staff agree, in

statements sent to each competent authority,prior to their acting in an arbitrationproceeding, to abide by and be subject tothe same confidentiality and non-disclosureobligations described in paragraph 2 ofArticle 27 of the Convention and in theapplicable domestic laws of the ContractingStates.

(v) Each competent authority shall bear the costof its appointed arbitrator and its ownexpenses. The cost of the chair of an

arbitration panel and other expensesassociated with the conduct of theproceedings shall be borne by the competentauthorities in equal shares.

(c) The competent authorities shall provide theinformation necessary for the arbitrationdecision to all arbitrators and their staffwithout undue delay.

(d) An arbitration decision shall be treated asfollows:

(i) An arbitration decision has no formalprecedential value.


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(ii) An arbitration decision shall be final,unless that decision is found to be

unenf

dtc agreement between japan and new zealand

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