Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1694412639399.pdf (Papua New Guinea)
No.2\of 2014.

Income Tax (International Agreements)(Amendment) Act 2014.

Certified on : 1 9 SEP 201* -V No.

21 of 2014.

Income Tax (International Agreements) (Amendment) Act 2Q14.

Certified on : No.

21 of 2014.

Income Tax (International Agreements)(Amendment) Act 2014.

ARRANGEMENT OF SECTIONS.

1.

2.

Interpretation (Amendment of Section 1).

New Section 31.

"31.

AGREEMENT WITH INDONESIA".

3.

New Section 3J.

"3J.

AGREEMENT WITH NEW ZEALAND".

4.

5.

New Schedule 10.

New Schedule 11.

No.


ft of 2014.

An Act entitled Income Tax (International Agreements)(Amendment) Act 2014, Being an Act to amend the Income Tax (International Agreements) Act 1987, MADE by the National Parliament to be deemed to have come into operation on 21 January 2014.

1.

INTERPRETATION (AMENDMENT OF SECTION 1).
Section 1 of the Principal Act is amended in Subsection (1) by - (a) inserting immediately after the definition "the Germany Agreement" the following new definition: ""the Indonesian Agreement" means the agreement between the Government of the Independent State of Papua New Guinea and the Government of the Republic of Indonesia for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, being the agreement a copy of which is set out in Schedule 10;"; and (b) inserting immediately after the definition "the Malaysian Agreement" the following new definition: ""the New Zealand Agreement" means the agreement between the Government of the Independent State of Papua New Guinea and the Government of New Zealand for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, being the agreement a copy of which is set out in Schedule 11;".
2.

NEW SECTION 31.

The Principal Act is amended by inserting immediately after Section 3H the following new section: "31.

AGREEMENT WITH INDONESIA.

Subject to this Act, on and after the date of entry into force of the Indonesian Agreement, the provisions of the agreement so far as those provisions affect Papua New Guinea tax, have the force of law according to their tenor.".

3.

NEW SECTION 3J.

The Principal Act is amended by inserting immediately after Section 31 the following new section: "3J.
AGREEMENT WITH NEW ZEALAND.

Subject to this Act, on and after the date of entry into force of the New Zealand Agreement, the provisions of the agreement so far as those provisions affect Papua New Guinea tax, have the force of law according to their tenor.".

Income Tax (International Agreements)(Amendment) 4.

NEW SCHEDULE 10.
The Principal Act is amended by inserting immediately after Schedule 9 the following new schedule: "SCHEDULE 10 AGREEMENT BETWEEN THE GOVERNMENT OF THE INDEPENDENT STATE OF PAPUA NEW GUINEA AND THE GOVERNMENT OF THE REPUBLIC OF INDONESIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME THE GOVERNMENT OF THE INDEPENDENT STATE OF PAPUA NEW GUINEA AND THE GOVERNMENT OF THE REPUBLIC OF INDONESIA Desiring to conclude an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, have agreed as follows: ARTICLE 1 Personal Scope This Agreement shall apply to persons who are residents of one or both of the Contracting States.
ARTICLE 2 Taxes Covered This Agreement shall apply to taxes on income imposed on behalf of a Contracting State, 1. irrespective of the manner in which they are levied.

There shall be regarded as taxes on income all taxes imposed on total income, or on elements of 2. income, including taxes on gains from the alienation of movable or immovable property.

3.
The taxes which are the subject of this Agreement are: (a) in the case of Papua New Guinea: the income tax imposed under the law of Papua New Guinea, including: (i) the salary or wages tax; - 2- Income Tax (International Agreements)(Amendment) (ii) the additional profits tax upon additional profits from mining operations; (iii) the additional profits tax upon additional profits from petroleum operations; (iv) the additional profits tax upon additional profits from gas operations; (v) the dividend withholding tax upon taxable dividend income; (vi) the foreign contractor withholding tax; (vii) the management fee withholding tax; (viii) the business payments tax; and (ix) the interest withholding tax; (hereinafter referred to as "Papua New Guinea tax"); (b) in the case of Indonesia: the income tax; (hereinafter referred to as "Indonesian tax").
The Agreement shall apply also to any identical or substantially similar taxes which are imposed 4. after the date of signature of the Agreement in addition to, or in place of, the existing taxes.

The competent authorities of the Contracting States shall notify each other of any significant changes which have been made in their respective taxation laws.

ARTICLE 3 General Definitions 1.
For the purposes of this Agreement, unless the context otherwise requires: (a) the term — (i) (ii) "Papua New Guinea" means the Independent State of Papua New Guinea and, when used in a geographical sense, includes any area adjacent to territorial limits of Papua New Guinea in respect of which there is, consistent with international law, a law of Papua New Guinea dealing with the exploitation of any of the natural resources of the Continental Shelf, its sea bed and sub-soil; "Indonesia" comprises the territory of the Republic of Indonesia as defined in its laws, and parts of the continental shelf and adjacent seas over which the Republic of Indonesia has sovereignty, sovereign rights or jurisdiction in accordance with International Law; - 3- Income Tax (International Agreements) (Amendment) (b) the terms "a Contracting State" and "the other Contracting State" mean Papua New Guinea or Indonesia as the context requires; (c) the term "person" includes an individual, a company and any other body of persons; (d) (e) the term "company" means anybody corporate or any entity which is treated as a body corporate for tax purposes; the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State; (f) the term "tax" means Papua New Guinea tax or Indonesian tax as the context requires; (g) the term "national" means: (i) any individual
 possessing the nationality of a Contracting State; (ii) any legal person, partnership, association or any other entity deriving its status as such from the laws in force in a Contracting State; (h) the term "international traffic" means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State; (i) the term "competent authority" means: (i) in the case of Papua New Guinea, the Commissioner General of Internal Revenue or an authorised representative of the Commissioner General of Internal Revenue; and (ii) in the case of Indonesia, the Minister of Finance or his authorised representative.
In this Agreement the terms "Papua New Guinea tax" and "Indonesian tax" do not include any 2. amount which represents a penalty or interest imposed under the law of either Contracting State relating to the taxes to which this Agreement applies.
As regards the application of the Agreement at any time by a Contracting State, any term not 3. defined therein shall, unless the context otherwise requires, have the meaning which it has at that time under the laws of that State for the purposes of the taxes to which the Agreement applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.
ARTICLE 4 Resident For the purposes of this Agreement, the term "resident of a Contracting State" means any person 1. who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature and also includes that State and any political subdivision or local authority thereof.

This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State.
- 4- Income Tax (International Agreements)(Amendment) Where by reason of the provisions of Paragraph 1, a person, being an individual, is a resident of 2. both Contracting States, then the status of that person shall be determined in accordance with the following rules: (a) (b) (c) (d) (e) the person shall be deemed to be a resident of the Contracting State in which the person has a permanent home; if a permanent home is available to the person in both States, or in neither of them, the person shall be deemed to be a resident of the State with which the person's personal and economic relations are the closer (centre of vital interests); if the Contracting State in which the person's centre of vital interests cannot be determined, and the person has no permanent home in either State, the person shall be deemed to be a resident of the State in which the person has an habitual abode; if the person has an habitual abode in both Contracting States or in neither of them, the person shall be deemed to be a resident of the State of which the person is a national; if the person is a national of both Contracting States or is a national of neither Contracting State, the competent authorities of the Contracting States shall settle the question by mutual agreement.
Where, by reason of the provisions of Paragraph 1, a person other than an individual is a resident 3. of both Contracting States, the competent authorities of the States shall settle the question by mutual agreement.

ARTICLE 5 Permanent Establishment For the purposes of this Agreement, the term "permanent establishment" means a fixed place of 1. business through which the business of an enterprise is wholly or partly carried on.

2.
The term "permanent establishment" shall include especially: (a) a place of management; (b) a branch; (c) an office; (d) a factory; (e) a workshop; (f) a warehouse or premises used as a sales outlet; (g) a mine, an oil or gas well, a quarry or any other place of extraction or exploration or exploitation of natural resources, drilling rig or working ship used for exploration or exploitation of natural resources; - 5- Income Tax (International Agreements) (Amendment) (h) a farm or other place where agricultural, forestry, logging, pastoral or plantation activities are carried on.
3.
The term "permanent establishment" likewise encompasses: (a) (b) a building site, a construction, assembly or installation project or supervisory activities in connection therewith, but only where such site, project or activities continue for a period of more than 120 days; the furnishing of services, other than technical services as stipulated under Article 13, by an enterprise through employees or other personnel engaged by the enterprise for such purpose, but only where activities of that nature continue (for the same or a connected project) within the country for a period or periods aggregating more than 120 days within any twelve month period.
Notwithstanding the preceding provisions of this Article, the term "permanent establishment" 4. shall be deemed not to include: (a) (b) (c) (d) (e) (f) (g) the use of facilities solely for the purpose of storage or display of goods or merchandise belonging to the enterprise; the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage or display; the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or of collecting information, for the enterprise; the maintenance of a fixed place of business solely for the purpose of advertising, or for the supply of information, for the enterprise; the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character; the maintenance of a fixed place of business solely for any combination of activities mentioned in Sub-paragraphs (a) to (f), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.
Notwithstanding the provisions of Paragraphs 1 and 2, where a person - other than an agent of an 5. independent status to whom Paragraph 6 applies - is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned State in respect of any activities which that person undertakes for the enterprise, if such a person: (a) has or habitually exercises in that State an authority to conclude contracts in the name of the enterprise, unless the activities of such person are limited to those mentioned in Paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph; or - 6- Income Tax (International Agreements)(Amendment) (b) has no such authority, but habitually maintains in the first-mentioned State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise; or (c) manufactures or processes in that State for the enterprise, goods or merchandise belonging to the enterprise.
An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the 6. other Contracting State merely because it carries on business in that other State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business.
However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise, he will not be considered an agent of an independent status within the meaning of this paragraph.
The fact that a company which is a resident of a Contracting State controls or is controlled by a 7. company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.
ARTICLE 6 Income from Real Property Income derived by a resident of a Contracting State from immovable property (including income 1. from agriculture or forestry) situated in the other Contracting State may be taxed in that other State.

2.

For the purposes of this Agreement, the term "immovable property" shall be defined in accordance with the laws of the Contracting State in which the property in question is situated.
The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work or the right to explore for, mineral deposits, oil or gas deposits, quarries and other places of extraction of natural resources including indigenous and exotic timber or other forest produce.
Ships, boats and aircraft shall not be regarded as immovable property.

The provisions of Paragraph 1 shall also apply to income derived from the direct use, letting, or 3. use in any other form of immovable property.

Any interest or right referred to in Paragraph 2 shall be regarded as situated where the land, 4. mineral deposits, sources and other natural resources, as the case may be, are situated or where the exploration may take place.
The provisions of Paragraphs 1 and 3 shall also apply to the income from immovable property of 5. an enterprise and to income from immovable property used for the performance of independent personal services.

- 7- Income Tax (International Agreements)(Amendment) ARTICLE 7 Business Profits The profits of an enterprise of a Contracting State shall be taxable only in that State unless the 1. enterprise carries on business in the other Contracting State through a permanent establishment situated therein.
If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to: (a) that permanent establishment; or (b) (c) sales within that other Contracting State of goods or merchandise of the same or a similar kind as those sold through that permanent establishment; or other business activities carried on in that other State of the same or similar kind as those effected through that permanent establishment.
Subject to the provisions of Paragraph 3, where an enterprise of a Contracting State carries on 2. business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and independent enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.
3.

In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purpose of the business of the permanent establishment including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere.
However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission, for specific services performed or for management, or except in the case of a banking enterprise, by way of interest on moneys lent to the permanent establishment.
Likewise, no account shall be taken, in the determination of the profits of a permanent establishment, for amounts charged, (otherwise than towards reimbursement of actual expenses), by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on moneys lent to the head office of enterprise or any of its other offices.
No profits shall be attributed to a permanent establishment by reason of the mere purchase by that 4. permanent establishment of goods or merchandise for the enterprise.

5.

Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.

6.
6.

For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.
- 8- Income Tax (International Agreements)(Amendment) Nothing in this article shall affect the operation of any law of one of the Contracting States 7. relating to tax imposed on profits derived by non-residents on insurance premiums collected, or from insurance relating to risks arising or to property, in that State, whether or not that law deems the existence of a permanent establishment in relation to the relevant activity.
ARTICLE 8 Shipping and Air Transport Profits derived by an enterprise of a Contracting State from the operation of ships or aircraft in 1. international traffic shall be taxable only in that State.

The provision of Paragraph 1 shall also apply to profits from the participation in a pool, a joint 2. business or international operating agency.
The term "operation of ships or aircraft" shall mean the business of transportation by sea or air of 3. passengers, mail, livestock or goods carried on by the owners or lessees or charterers of ships or aircraft and the incidental lease of ships or aircraft.

ARTICLE 9 Associated Enterprises 1.
Where: (a) (b) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State; or the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State; and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.
Where a Contracting State includes in the profits of an enterprise of that State, and taxes 2. accordingly, profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first- mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits.
In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting States shall if necessary consult each other.

A Contracting State shall not change the profits of an enterprise in the circumstances referred to 3. in Paragraph 2 after the expiry of the time limits provided in its tax laws.
- 9- Income Tax (International Agreements)(Amendment) ARTICLE 10 Dividends Dividends derived from a company which is a resident of a Contracting State by a resident of the 1. other Contracting State may be taxed in that other State.
However, such dividends may also be taxed in the Contracting State of which the company 2. paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax charged shall not exceed 15 per cent of the gross amount of the dividends.

This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.
The term "dividends" as used in this Article means income from shares or other rights, not being 3. debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of State of which the company making the distribution is a resident.

4.
The provisions of Paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base.
In such case, the provisions of Article 7 or Article 15, as the case may be, shall apply.

5.
Where a company which is a resident of a Contracting State derives income or profits from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except in so far as such dividends are paid to a resident of that other State or in so far as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company's undistributed profits to a tax on the company's undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in that other State.
Notwithstanding any other provisions of this Agreement where a company which is a resident of a 6.

Contracting State has a permanent establishment in the other Contracting State, the profits of the permanent establishment may be subjected to an additional tax in that other State in accordance with its law, but the additional tax so charged shall not exceed 15 per cent of the amount of such profits after deducting therefrom income tax and other taxes on income imposed thereon in that other State.
The provisions of Paragraph 6 of this Article shall not affect the provision contained in any 7. production sharing contract and relating to oil and gas sector or other mining sectors concluded by the Government of Indonesia, its instrumentality, its relevant state oil and gas company or any other entity thereof with a person who is a resident of the other Contracting State.
- 1 0- Income Tax (International Agreements)(Amendment) ARTICLE 11 Interest Interest arising in a Contracting State and paid to a resident of the other Contracting State may be 1. taxed in that other State.

However, such interest may also be taxed in the Contracting State in which it arises and according 2. to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the interest.
The competent authorities of the Contracting State shall by mutual agreement settle the mode of application of this limitation.
Notwithstanding the provisions of Paragraph 2, interest arising in a Contracting State and derived 3. by the Government of the other Contracting State including local authorities thereof, a political subdivision, the Central Bank or any financial institution controlled by that Government, the capital of which is wholly owned by the Government of the other Contracting State, as may be agreed upon from time to time between the competent authorities of the Contracting States, shall be exempt from tax in the first-mentioned State.
4.

The term "interest" as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage, and whether or not carrying a right to participate in the debtor's profits, and in particular, income from government securities and income from bonds or debentures including premiums and prises attaching to such securities, bonds or debentures.

Penalty charges for late payment shall not be regarded as interest for the purpose of this Article.

5.
The provisions of Paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with: (a) such permanent establishment or fixed base; or (b) business activities referred to under Sub-paragraph l(c) of Article 7, in which case the provisions of Article 7 or Article 15, as the case may be, shall apply.
Interest shall be deemed to arise in a Contracting State when the payer is that Contracting State 6. itself, a political subdivision, a local authority or a resident of that State.
Where, however, the person paying the interest, whether the person is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by that permanent establishment or fixed base, then such interest shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated.

7.
7.

Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount.
In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.

-11- Income Tax (International Agreements)(Amendment) The provisions of this Article shall not apply if the debt-claim in respect of which the interest is 8. paid was created or assigned mainly for the purpose of taking advantage of this Article.
ARTICLE 12 Royalties Royalties arising in a Contracting State and paid to a resident of the other Contracting State may 1. be taxed in that other State.

However, such royalties may also be taxed in the Contracting State in which they arise and 2. according to the laws of that State, but if the beneficial owner of the royalties is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the royalties.
The competent authorities of the Contracting State shall by mutual agreement settle the mode of application of this limitation.

3.
The term "royalties" as used in this Article means amounts paid or accrued, whether periodical or not, and in whatever form or name or nomenclature to the extent to which they are made as consideration for: (a) the use of, or the right to use, any copyright, patent, design or model, plan, secret formula or process, trademark, or other like property or right; or (b) the use of, or the right to use, any industrial, commercial or scientific equipment; or (c) the supply of scientific, technical, industrial or commercial knowledge or information; or (d) the supply of any assistance that is ancillary and subsidiary to any such property or right as is mentioned in Sub-paragraph (a), any such equipment as is mentioned in Sub- Paragraph (b) or any such knowledge or information as is mentioned in Sub-paragraph (c); or (e) the use of, or the right to use: (i) cinematography or motion picture films; or (ii) films or video tapes in connection with television; or (iii) tapes or compact disks in connection with radio and television broadcasting; or (iv) programs developed in connection with the use of computers; or (f) total or partial forbearance in respect of the use or supply of any property or right referred to in this paragraph.
4.
The provisions of Paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties are paid is effectively connected with: - 1 2- Income Tax (International Agreements) (Amendment) (a) such permanent establishment or fixed base; or (b) business activities referred to in Sub-paragraph (l)(c) of Article 7, in which case the provisions of Article 7 or Article 15, as the case may be, shall apply.
5.

Royalties shall be deemed to arise in a Contracting State when the payer is that State itself, a political subdivision, a local authority or a statutory body thereof, or a resident of that State.
Where, however, the person paying such royalties, whether the person is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the obligation to pay the royalties was incurred, then such royalties shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated.
Where, by reason of a special relationship between the payer and the beneficial owner or between 6. both of them and some other persons, the amount of royalties, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount.
In such case, the excess part of the payment shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.

ARTICLE 13 Technical Fees Technical fees arising in a Contracting State and paid to a resident of the other Contracting State 1. may be taxed in that other State.
However, such technical fees may also be taxed in the Contracting State in which they arise and 2. according to the laws of that State, but if the recipient is the beneficial owner of the technical fees the tax shall not exceed 10 per cent of the gross amount of the technical fees.
The term "technical fees" as used in this Article means payments of any kind to any person, other 3. than to an employee of the person making the payments, in consideration for any services of a technical, managerial or consultancy nature.
The provisions of Paragraphs 1 and 2 shall not apply if the beneficial owner of the technical fees, 4. being a resident of a Contracting State, carries on business in the other Contracting State in which the technical fees arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the technical fees are effectively connected with such permanent establishment or fixed base.
In such case, the provisions of Article 7 or Article 15, as the case may be, shall apply.

Technical fees shall be deemed to arise in a Contracting State when the payer is that State itself, a 5. political subdivision, a local authority or a statutory body thereof, or a resident of that State.
Where, however, the person paying the technical fees, whether the person is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the obligation to pay the technical fees was incurred, and such technical fees are borne by that permanent establishment or fixed base, then such technical fees shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated.
- 1 3- Income Tax (International Agreements)(Amendment) Where, by reason of a special relationship between the payer and the beneficial owner or between 6. both of them and some other person, the amount of the technical fees paid exceeds, for whatever reason, the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount.
In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.

ARTICLE 14 Capital Gains Gains derived by a resident of a Contracting State from the alienation of immovable property 1. referred to in Article 6 and situated in the other Contracting State may be taxed in that other State.

2.
Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise) or of such fixed base, may be taxed in that other State.
Gains derived by an enterprise of a Contracting State from the alienation of ships or aircraft 3. operated in international traffic or movable property pertaining to the operation of such ships or aircraft shall be taxable only in that State.

Gains from the alienation of any property other than that referred to in the preceding paragraphs 4. shall be taxable only in the Contracting State of which the alienator is a resident.
ARTICLE 15 Independent Personal Services Income derived by a resident of a Contracting State in respect of professional services or other 1. activities of an independent character shall be taxable only in that State unless he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities or he is present in that other State for a period or periods exceeding in the aggregate 183 days within any 12 month period.
If he has such a fixed base or remains in that other State for the aforesaid period or periods, the income may be taxed in that other State but only so much of it as is attributable to that fixed base or is derived in that other State during the aforesaid period or periods.
The term "professional services" includes especially independent scientific, literary, artistic, 2. educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants.

- 1 4- Income Tax (International Agreements)(Amendment) ARTICLE 16 Dependent Personal Services 1.
Subject to the provisions of Article 17, 19, 20 and 21, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State.

If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.

2.
Notwithstanding the provisions of Paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if: (a) (b) (c) the recipient is present in that other State for a period or periods not exceeding in the aggregate 183 days within any 12 month period commencing or ending in the fiscal year concerned; and the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State.
Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an 3. employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State shall be taxable only in that State.
ARTICLE 17 Directors' Fees Directors' fees and other similar payments derived by a resident of a Contracting State in his 1. capacity as a member of the board of directors or any other similar organ of a company which is a resident of the other Contracting State may be taxed in that other State.
The remuneration which a person to whom Paragraph 1 applies derived from the company in 2. respect of the discharge of day-to-day functions of a managerial or technical nature may be .taxed in accordance with the provisions of Article 16.

ARTICLE 18 Artistes and Sportspersons Notwithstanding the provisions of Articles 15 and 16, income derived by a resident of a 1.
Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsperson, from personal activities as such exercised in the other Contracting State, may be taxed in the other State.
- 1 5- Income Tax (International Agreements)(Amendment) Where income in respect of personal activities exercised by an entertainer or a sportsperson in 2. that capacity accrues not to the entertainer or sportsperson but to another person, that income may, notwithstanding the provisions of Articles 7, 15 and 16, be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised.
Notwithstanding the provisions of Paragraphs 1 and 2, income derived from activities referred to 3. in Paragraph 1 performed under a cultural agreement or arrangement between the Contracting States shall be exempt from tax in the Contracting State in which the activities are exercised if the visit to that State is wholly or substantially supported by funds of one or both of the Contracting States, a local authority or public institution thereof.
ARTICLE 19 Pensions and Annuities Subject to the provisions of Paragraph 2 of Article 20, any pensions and other similar 1. remuneration for past employment or any annuity arising in a Contracting State and paid to a resident of the other Contracting State shall be taxable only in that other State.

2.
2.

The term "annuity" includes a stated sum payable periodically at stated times, during life or during a specified or ascertainable period of time, under an obligation to make the payments in return for adequate and full consideration in money or money's worth.

ARTICLE 20 Government Services 1.


(a) Salaries, wages and other similar remuneration, other than a pension, paid by a Contracting State or a political subdivision or a local authority or a statutory body thereof to any individual in respect of services rendered to that State or political subdivision or a local authority or statutory body thereof shall be taxable only in that State.
(b) However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that other State and the individual is a resident of that other State who: (i) (ii) is a national of that other State; or did not become a resident of that other State solely for the purpose of rendering the services.

2.
2.

The provisions of Articles 16, 17 and 19 shall apply to salaries, wages and other similar remuneration and to pensions in respect of services rendered in connection with a business carried on by a Contracting State or a political subdivision or a local authority or a statutory body thereof.
-16- Income Tax (International Agreements) (Amendment) ARTICLE 21 Teachers and Researchers An individual who is immediately before visiting a Contracting State a resident of the other Contracting State and who, at the invitation of the Government of the first-mentioned Contracting State or of a university, college, school, museum or other cultural institution in that first mentioned Contracting State or under an official programme of cultural exchange, is present in that Contracting State for a period not exceeding two consecutive years solely for the purpose of teaching, giving lectures or carrying out research at such institution shall be exempt from tax in that Contracting State on his remuneration for such activity, provided that payment of such remuneration is derived by him from outside that Contracting State.
ARTICLE 22 Students and Trainees Payments which a student or business trainee who is or was immediately before visiting a 1.

Contracting State a resident of the other Contracting State and who is present in the first-mentioned Contracting State solely for the purpose of his education or training received for the purpose of his maintenance, education or training shall not be taxed in that Contracting State, provided that such payments arise from sources outside that Contracting State.

2.
2.

In respect of grants, scholarship and remuneration from employment not covered by Paragraph 1, a student or business trainee described in Paragraph 1 shall, in addition, be entitled during such education or training to the same exemption, reliefs or reductions in respect of taxes available to residents of the Contracting State which he is visiting.
ARTICLE 23 Other Income Items of income of a resident of one of the Contracting States which are not expressly mentioned 1. in the foregoing Articles of this Agreement shall be taxable only in that State.

However, any such income derived by a resident of one of the Contracting States from sources in 2. the other Contracting State may also be taxed in that other State.

The provisions of Paragraph 1 shall not apply to income derived by a resident of one of the 3.
Contracting States where that income is effectively connected with a permanent establishment or fixed base situated in the other Contracting State.

In such case, the provisions of Article 7 or Article 15, as the case may be, shall apply.
-17- Income Tax (International Agreements)(Amendment) ARTICLE 24 Methods for the Elimination of Double Taxation Where a resident of a Contracting State derives income from the other Contracting State, the amount of tax on that income payable in that other Contracting State in accordance with the provisions of this Agreement, may be credited against the tax levied in the first-mentioned Contracting State imposed on that resident.
The amount of credit, however, shall not exceed the amount of the tax on the first- mentioned Contracting State on that income computed in accordance with its taxation laws and regulations.
ARTICLE 25 Non-Discrimination Nationals of a Contracting State shall not be subjected in the other Contracting State to any 1. taxation or any requirement connected therewith which is other or more burdensome than taxation and connected requirements to which nationals of that other State in the same circumstances are or may be subjected.

2.
2.

The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favorably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities.
This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, relief and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.
Enterprise of a Contracting State, the capital of which is wholly or partly owned or controlled, 3. directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first- mentioned State are may be subjected.
Except where the provisions of Paragraph 1 of Article 9, Paragraph 7 of Article 11, or Paragraph 4.

6 of Article 12 apply, interest, royalty and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State.

.

5.
.

5.

In this Article the term "taxation" means taxes which are the subject of this Agreement.
-18- Income Tax (International Agreements) (Amendment) ARTICLE 26 Mutual Agreement Procedure Where a person considers that the actions of one or both of the Contracting States result or will 1. result for him in taxation not in accordance with the provisions of this Agreement, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under Paragraph 1 of Article 25, to that of the Contracting State of which he is a national.
The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the Agreement.
The competent authority shall endeavour, if the objection appears to it to be justified and if it is 2. not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with this Agreement.
The competent authorities of the Contracting States shall endeavour to resolve by mutual 3. agreement any difficulties or doubts arising as to the interpretation or application of the Agreement.

They may also consult together for the elimination of double taxation in cases not provided for in the Agreement.

The competent authorities of the Contracting States may communicate with each other directly for 4. the purpose of reaching an agreement in the sense of preceding paragraphs.
The competent authorities, through consultations, shall develop appropriate bilateral procedures, conditions, methods and techniques for the implementation of the mutual agreement procedure provided for in this Article.
ARTICLE 27 Exchange of Information The competent authorities of the Contracting States shall exchange such information as is 1. necessary for carrying out the provisions of this Agreement or of the domestic laws of the Contracting States concerning taxes covered by the Agreement, insofar as taxation thereunder is not contrary to this Agreement, in particular for the prevention of fraud or evasion of such taxes.

The exchange of information is not restricted by Article 1.
Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State.
However, if the information is originally regarded as secret in the transmitting State it shall be disclosed only to persons or authorities (including courts and administrative bodies) involved in the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes which are the subject of the Agreement.
Such persons or authorities shall use the information only for such purposes but may disclose the information in public court proceedings, or in judicial decisions.
In no case shall the provisions of Paragraph 1 be construed so as to impose on a Contracting State 2. the obligation: (a) to carry out administrative measures at variance with the laws and administrative practices of that or of the other Contracting State; - 1 9- Income Tax (International Agreements)(Amendment) (b) (c) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State; to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy.
ARTICLE 28 Members of Diplomatic Missions and Consular Posts Nothing in this Agreement shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreements.
ARTICLE 29 Entry into Force This Agreement shall enter into force on the later of the dates on which the respective Governments may notify each other in writing through diplomatic channels that the formalities constitutionally required in their respective Contracting States for the entry into force of this Agreement have been complied with.
This Agreement shall have effect: (a) in Papua New Guinea: (i) (ii) in respect of withholding tax on income that is derived by a non-resident, in relation to income derived on or after 1 January in the calendar year next following that in which the later of these notifications is given; in respect of any other Papua New Guinea tax, in relation to income of any year of income beginning on or after 1 January in the calendar year next following that in which the later of these notifications is given; (b) in Indonesia: (i) (ii) in respect of tax withheld at the source to income derived on or after 1 January in the year next following that in which the Agreement enters into force; and in respect of other taxes on income, for taxable years beginning on or after 1 January in the year next following that in which the Agreement enters into force.
ARTICLE 30 Termination This Agreement shall remain in force until terminated by a Contracting State.

Either Contracting State may terminate the Agreement, through diplomatic channels, by giving written notice of termination on or before the 30th day of June of any calendar year following after the period of five years from the year in which the Agreement enters into force.
- 2 0- Income Tax (International Agreements) (Amendment) In such case, the Agreement shall cease to have effect: (a) in Papua New Guinea: (i) (ii) in respect of withholding tax on income that is derived by a non-resident, in relation to income derived on or after 1 January in the calendar year next following that in which notification is given; in respect of any other Papua New Guinea tax, in relation to income of any year of income beginning on or after 1 January in the calendar year next following in which the notification is given; (b) in Indonesia: (i) (ii) in respect of tax withheld at source to income derived on or after 1 January in the year next following that in which the notice of termination is given; in respect of other taxes on income, for taxable years beginning on or after 1 January in the year next following that in which the notice of termination is given.
IN WITNESS WHEREOF the undersigned, duly authorised thereto, have signed this Agreement.

DONE in duplicate at day of.

Indonesia languages, both texts being equally authentic.

this , 20.... in the English and Bahasa FOR THE GOVERNMENT OF THE INDEPENDENT STATE OF PAPUA NEW GUINEA FOR THE GOVERNMENT OF THE REPUBLIC OF INDONESIA".

5.

NEW SCHEDULE 11.
The Principal Act is amended by inserting immediately after Schedule 10 the following new schedule: "SCHEDULE 11 AGREEMENT BETWEEN THE GOVERNMENT OF NEW ZEALAND AND THE GOVERNMENT OF THE INDEPENDENT STATE OF PAPUA NEW GUINEA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME THE GOVERNMENT OF NEW ZEALAND AND THE GOVERNMENT OF THE INDEPENDENT STATE OF PAPUA NEW GUINEA - 2 1- Income Tax (International Agreements)(Amendment) Desiring to conclude an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, have agreed as follows: ARTICLE 1 Personal Scope This Agreement shall apply to persons who are residents of one or both of the Contracting States.
ARTICLE 2 Taxes Covered 1.
The taxes to which the Agreement shall apply are: (a) In New Zealand: the income tax (hereinafter referred to as "New Zealand tax"); (b) In the Independent State of Papua New Guinea: the income tax imposed under the law of Papua New Guinea, including: (i) the salary or wages tax; (ii) the additional profits tax upon additional profits from resource projects; (iii) the dividend withholding tax upon taxable dividend income; (iv) the foreign contractor withholding tax; (v) the management fee withholding tax; (vi) the business payments tax; and (vii) the interest withholding tax; (hereinafter referred to as "Papua New Guinea tax").
The Agreement shall apply also to any identical or substantially similar taxes that are imposed 2. after the date of signature of the Agreement in addition to, or in place of, the taxes listed in Paragraph 1.

The competent authorities of the Contracting States shall notify each other of any significant changes that have been made in their taxation laws.
Notwithstanding the provisions of Paragraphs 1 and 2, the taxes covered by the Agreement do not 3. include any amount which represents a penalty or interest imposed under the laws of either Contracting State.

- 2 2- Income Tax (International Agreements)(Amendment) ARTICLE 3 General Definitions 1.
For the purposes of this Agreement, unless the context otherwise requires: (a) (b) the term "Papua New Guinea" means the Independent State of Papua New Guinea and, when used in a geographical sense, includes any area adjacent to territorial limits of Papua New Guinea in respect of which there is for the time being in force, consistent with international law, a law of Papua New Guinea dealing with the exploitation of any of the natural resources of the Continental Shelf, its sea bed and sub-soil; the term "New Zealand" means the territory of New Zealand but does not include Tokelau; it also includes any area beyond the territorial sea designated under New Zealand legislation and in accordance with international law as an area in which we Zealand may exercise sovereign rights with respect to natural resources; (c) the terms "a Contracting State" and "the other Contracting State" mean Papua New Guinea or New Zealand as the context requires; (d) the term "person" includes an individual, a company and any other body of persons; (e) (f) the term "company" means anybody corporate or any entity which is treated as a body corporate for tax purposes; the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State; (g) the term "tax" means Papua New Guinea tax or New Zealand, tax as the context requires; (h) the term "national" means: (i)
 any individual possessing the nationality or citizenship of a Contracting State; (ii) any legal person, partnership, association or any other entity deriving its status as such from the laws in force in a Contracting State; (i) the term "international traffic" means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State; (j) the term "competent authority" means: (i) in the case of Papua New Guinea, the Commissioner General of Internal Revenue or an authorised representative of the Commissioner General of Internal Revenue; and (ii) in the case of New Zealand, the Commissioner of Inland Revenue or an authorised representative.
-23- Income Tax (International Agreements)(Amendment) For the purposes of Articles 10, 11 and 12, dividends, interest or royalties arising in a Contracting 2.
State and derived by or through a trust shall be deemed to be beneficially owned by a resident of the other Contracting State where: (a) such income is subject to tax in that other State in the hands of the trustee of that trust; (b) with reference to dividends, the income would be subject to tax in the hands of the trustee of that trust but for an exemption that applies to those dividends under the laws of that other State.

3.
3.

As regards the application of the Agreement at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the purposes of the taxes to which the Agreement applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.
ARTICLE 4 Resident For the purposes of this Agreement, the term "resident of a Contracting State" means any person 1. who, under the laws of that State, is liable to tax therein by reason of domicile, residence, place of incorporation, place of management or any other criterion of a similar nature and also includes that State and any political subdivision or local authority thereof.
This term however, does not include any person who is liable to tax in that State in respect only of income from sources in that State.
Where by reason of the provisions of Paragraph 1 a person, being an individual, is a resident of 2. both Contracting States, then the status of that person shall be determined in accordance with the following rules: (a) (b) (c) (d) (e) the person shall be deemed to be a resident of the Contracting State in which the person has a permanent home; if a permanent home is available to the person in both States, or in neither of them, the person shall be deemed to be a resident of the State with which the person's personal and economic relations are the closer (centre of vital interests); if the Contracting State in which the person's centre of vital interests cannot be determined, and the person has no permanent home in either State, the person shall be deemed to be a resident of the State in which the person has an habitual abode; if the person has an habitual abode in both Contracting States or in neither of them, the person shall be deemed to be a resident of the State of which the person is a national; if the person is a national of both Contracting States or is a national of neither Contracting State, the competent authorities of the Contracting States shall settle the question by mutual agreement.
-24- Income Tax (International Agreements)(Amendment) Where by reason of the provisions of Paragraph 1 a person, other than an individual, is a resident 3. of both Contracting States, then it shall be deemed to be a resident only of the State in which its place of effective management is situated.
If the State in which the place of effective management is situated cannot be determined, or the place of effective management is in neither State, then the competent authorities of the Contracting States shall endeavour to determine by mutual agreement in accordance with Article 23 the Contracting State of which the person shall be deemed to be a resident for the purposes of the Agreement, having regard to its places of management, the place where it is incorporated or otherwise constituted and any other relevant factors.
In the absence of such agreement, such person shall not be entitled to any reliefer exemption from tax provided by this Agreement.

ARTICLE 5 Permanent Establishment For the purposes of this Agreement, the term "permanent establishment" means a fixed place of 1. business through which the business of an enterprise is wholly or partly carried on.

2.
2.

The term "permanent establishment" includes especially: (a) a place of management; (b) a branch; (c) an office; (d) a factory; (e) a workshop; (f) (g) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources including timber or other forestry products; and a farm or other place where agricultural, forestry, pastoral, plantation or other related activities are carried on.
A building site, or a construction, installation or assembly project, or supervisory activities in 3. connection with that building site or construction, installation or assembly project, constitutes a permanent establishment if it lasts more than 90 days.
An enterprise shall be deemed to have a permanent establishment in a Contracting State and to 4. carry on business through that permanent establishment if for more than 90 days in any 365 day period: (a) it carries on activities in that State which consist of, or which are connected with, the exploration for or exploitation of natural resources, including indigenous and exotic timber or other forest products, situated in that State; or (b) it operates substantial equipment in that State.
-25- Income Tax (International Agreements) (Amendment) An enterprise shall be deemed to have a permanent establishment in one of the Contracting States 5. and to carry on business through that permanent establishment if services are furnished in that State, including consultancy services through employees or other personnel engaged by the enterprise for such purposes, and those activities continue for the same or a connected project within that State for a period or periods aggregating more than 183 days in any 365 day period.
Notwithstanding the preceding provisions of this Article, the term "permanent establishment" 6. shall be deemed not to include: (a) (b) (c) (d) (e) (f) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise; the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery; the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise; the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character; the maintenance of a fixed place of business solely for any combination of activities mentioned in Sub-paragraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.
Notwithstanding the provisions of Paragraphs 1 and 2, where a person - other than an agent of an 7. independent status to whom Paragraph 8 applies - is acting on behalf of an enterprise and: (a) (b) (c) has, and habitually exercises, in a Contracting State an authority to conclude contracts on behalf of the enterprise; or the person has no authority, but habitually maintains in the first-mentioned State a stock of goods or merchandise belonging to the enterprise from which that person regularly delivers goods or merchandise on behalf of the enterprise; or manufactures or processes in a Contracting State for the enterprise goods or merchandise belonging to the enterprise, that enterprise shall be deemed to have a permanent establishment in that State in respect of any activities which that person undertakes for the enterprise, unless the activities of such person are limited to those mentioned in Paragraph 6 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph.
-26- Income Tax (International Agreements)(Amendment) An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the 8. other Contracting State merely because it carries on business in that other State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business.
However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise, and conditions are made or imposed between that enterprise and the agent in their commercial and financial relations which differ from those which would have been made between independent enterprises, the agent will not be considered an agent of an independent status within the meaning of this paragraph.
The fact that a company which is a resident of a Contracting State controls or is controlled by a 9. company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.
ARTICLE 6 Income from Immovable Property Income derived by a resident of a Contracting State from immovable property (including income 1. from agriculture, forestry or fishing) situated in the other Contracting State may be taxed in that other State.

The term "immovable property" shall have the meaning which it has under the law of the 2.

Contracting State in which the property in question is situated.
The term shall in any case include any natural resources, property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting immovable property apply, usufruct of immovable property, rights to explore for or exploit natural resources (including mineral deposits, oil or gas deposits or quarries) or indigenous or exotic timber or other forest products, and rights to variable or fixed payments either as consideration for or in respect of the exploitation of, or the right to explore for or exploit natural resources (including mineral deposits, oil or gas deposits or quarries) or indigenous or exotic timber or other forest products; ships, boats and aircraft shall not be regarded as immovable property.
The provisions of Paragraph 1 shall apply to income derived from the direct use, letting, or use in 3. any other form of immovable property.

4.

The provisions of Paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services.
Any interest or right referred to in Paragraph 2 of this Article shall be regarded as situated where 5. the property to which it relates is situated or where the exploration or exploitation may take place.

-27- Income Tax (International Agreements)(Amendment) ARTICLE 7 Business Profits The profits of an enterprise of a Contracting State shall be taxable only in that State unless the 1. enterprise carries on business in the other Contracting State through a permanent establishment situated therein.
If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to: (a) that permanent establishment; or (b) sales within that other Contracting State of goods or merchandise of the same or a similar kind as those sold through that permanent establishment.
It is understood that the profits of an enterprise shall include profits attributable to sales of goods and merchandise referred to in this sub-paragraph only when the competent authority of the Contracting State in which a permanent establishment of the enterprise is situated considers that the enterprise has entered into an arrangement in relation to the sales of those goods or merchandise to avoid taxation of those profits in that Contracting State.
Subject to the provisions of Paragraph 3, where an enterprise of a Contracting State carries on 2. business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.
In determining the profits of a permanent establishment, there shall be allowed as deductions 3. expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere.

No profits shall be attributed to a permanent establishment by reason of the mere purchase by that 4. permanent establishment of goods or merchandise for the enterprise.
Nothing in this Article shall affect the application of any law of a Contracting State relating to the 5. determination of the tax liability of a person in cases where the information available to the competent authority of that State is inadequate to determine the profits to be attributed to a permanent establishment, provided that the law shall be applied, so far as the information available to the competent authority permits, consistent with the principles of this Article.
For the purposes of the preceding paragraphs, the profits to be attributed to the permanent 6. establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.

7.
Where: (a) a resident of a Contracting State beneficially owns (whether as a direct beneficiary of a trust or through one or more interposed trusts) a share of the profits of a business of an enterprise carried on in the other Contracting State by the trustee of a trust other than a trust which is treated as a company for tax purposes; and -28- Income Tax (International Agreements)(Amendment) (b) in relation to that enterprise, that trustee has or would have, if it were a resident of the first-mentioned State, a permanent establishment in the other State, then the business of the enterprise carried on by the trustee through such permanent establishment shall be deemed to be a business carried on in the other State by that resident through a permanent establishment situated in that other State and the resident's share of profits may be taxed in the other State but only so much of them as is attributable to that permanent establishment.
Where profits include items of income which are dealt with separately in other Articles of this 8.

Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.

Nothing in this Article shall affect any provisions of the laws of either Contracting State at any 9. time in force as they affect the taxation of any income from any form of insurance.

10.
Nothing in this Article shall affect the operation of the law of Papua New Guinea relating to the taxation of income derived by a foreign contractor from a prescribed contract, where, in accordance with this Agreement, that contractor is a resident of New Zealand with a permanent establishment in Papua New Guinea, provided that if the relevant law in force in either Contracting State at the date of signature of this Agreement is varied (other than in minor respects so as not to affect its general character) the Contracting States shall consult with each other with a view to agreeing to any amendment of this paragraph that may be appropriate.
ARTICLE 8 Shipping and Air Transport Profits derived by an enterprise of a Contracting State from the operation of ships or aircraft in 1. international traffic shall be taxable only in that State.

Notwithstanding the provisions of Paragraph 1 and Article 7, profits of an enterprise of a 2.
Contracting State derived from carriage by ship or aircraft of passengers, livestock, mail, goods or merchandise which are shipped or embarked in the other Contracting State and are discharged at a place in that other State, or for leasing on a full basis of a ship or aircraft for purposes of such carriage, may be taxed in that other State.

The provisions of Paragraphs 1 and 2 shall also apply to profits from the participation in a pool, a 3. joint business or an international operating agency.
For the purposes of this Article, profits from the operation of ships or aircraft in international 4. traffic shall include: (a) profits from the rental on a bareboat basis of ships or aircraft; and (b) profits from the use, maintenance or rental of containers (including trailers and related equipment for the transport of containers), used for the transport of goods or merchandise, where such rental or such use, maintenance or rental, as the case may be, is incidental to the operation of ships or aircraft in international traffic.
5.

The term "operation of ships or aircraft" shall mean the business of transportation by sea or air of passengers, mail, livestock or goods carried on by the owners or lessees or charterers of ships or aircraft.

-29- Income Tax (International Agreements)(Amendment) ARTICLE 9 Associated Enterprises 1.
Where- (a) (b) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State; or the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State, and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.
Nothing in this Article shall affect the application of any law of a Contracting State relating to the 2. determination of the tax liability of a person, including determinations in cases where the information available to the competent authority of that State is inadequate to determine the income to be attributed to an enterprise, provided that that law shall be applied, so far as it is practicable to do so, consistent with the principles of this Article.

3.
Where a Contracting State includes in the profits of an enterprise of that State - and taxes accordingly - profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first- mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits.
In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting States shall if necessary consult each other.

ARTICLE 10 Dividends Dividends paid by a company which is a resident of a Contracting State to a resident of the other 1.

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

This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.
The term "dividends" as used in this Article means income from shares and other income treated 3. as income from shares by the laws of the Contracting State of which the company making the distribution is a resident.
-30- Income Tax (International Agreements) (Amendment) The provisions of Paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, 4. being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base.
In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.
Where a company which is a resident of a Contracting State derives profits or income from the 5. other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company's undistributed profits to a tax on the company's undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.
ARTICLE 11 Interest Interest arising in a Contracting State and paid to a resident of the other Contracting State may be 1. taxed in that other State.

However, such interest may also be taxed in the Contracting State in which it arises and according 2. to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the interest.
Notwithstanding the provisions of Paragraph 2, the Government of a Contracting State shall be 3. exempt from tax in the other Contracting State in respect of interest derived by the Government from the other State.

4.
For the purposes of Paragraph 3, the term "Government": (a) in the case of Papua New Guinea, means the Government of the Independent State of Papua New Guinea and shall include: (i) the Bank of Papua New Guinea; (ii) the Provincial Governments; (iii) the Local Level Governments; and (iv) any institution carrying on functions of a governmental nature as may be agreed from time to time between the competent authorities of the Contracting States; (b) in the case of New Zealand, means the Government of New Zealand and shall include: (i) the Reserve Bank of New Zealand; (ii) local authorities; and -31- Income Tax (International Agreements)(Amendment) (iii) any institution carrying on functions of a governmental nature as may be agreed from time to time between the competent authorities of the Contracting States.
5.
The term "interest" as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prices attaching to such securities, bonds or debentures, as well as all other income treated as income from money lent by the laws, relating to tax, of the Contracting State in which the income arises, but does not include any income which is treated as a dividend under Article 10.
The provisions of Paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being 6. a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with: (a) such permanent establishment or fixed base; or (b) business activities referred to in Sub-paragraph l(b) of Article 7.
In such case, the provisions of Article 7 or Article 14, as the case may be, shall apply.

7.

Interest shall be deemed to arise in a Contracting State where the payer is a resident of that State.
Where, however, the person paying the interest, whether the person is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by or deductible in determining the profits attributable to such permanent establishment or fixed base, then such interest shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated.
8.

Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount.
In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.

The provisions of this Article shall not apply if the debt-claim in respect of which the interest is 9. paid was created or assigned mainly for the purpose of taking advantage of this Article.
ARTICLE 12 Royalties Royalties arising in a Contracting State and paid to a resident of the other Contracting State may 1. be taxed in that other State.

However, such royalties may also be taxed in the Contracting State in which they arise, and 2. according to the laws of that State, but if the beneficial owner of the royalties is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the royalties.
-32- Income Tax (International Agreements)(Amendment) The term "royalties" as used in this Article means payments or credits of any kind received as a 3. consideration for: (a) the use of, or the right to use, any copyright, patent, design or model, plan, secret formula or process, trademark, or other like property or right; (b) the use of, or the right to use, any industrial, scientific or commercial equipment; (c) (d) the supply of knowledge or information concerning technical, industrial, commercial or scientific experience; the supply of any assistance that is ancillary and subsidiary to, and is furnished as a means of enabling the application or enjoyment of, any such property or right as is mentioned in Sub-paragraph (a), any such equipment as is mentioned in Sub-paragraph (b) or any such knowledge or information as is mentioned in Sub-paragraph (c); (e) the use of, or the right to use: (i) cinematography or motion picture films; or (ii) films or video tapes in connection with television; or (iii) tapes or compact disks in connection with radio and television broadcasting; or (f) total or partial forbearance in respect of the use or supply of any property or right referred to in this paragraph.
4.
The provisions of Paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties are paid is effectively connected with: (a) such permanent establishment or fixed base; or (b) business activities referred to in Sub-paragraph l(b) of Article 7.
In such case, the provisions of Article 7 or Article 14, as the case may be, shall apply.

Royalties shall be deemed to arise in a Contracting State where the payer is a resident of that 5.

State.
Where, however, the person paying the royalties, whether the person is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the liability to pay the royalties was incurred, and the royalties are borne by or deductible in determining the profits attributable to such permanent establishment or fixed base then such royalties shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated.
- 3 3- Income Tax (International Agreements)(Amendment) Where, by reason of a special relationship between the payer and the beneficial owner or between 6. both of them and some other person, the amount of the royalties paid, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount, hi such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.
In this Article, a reference to royalties paid or to the payment of royalties includes royalties 7. credited or the crediting of royalties.

ARTICLE 13 Alienation of Property 1.

Income or gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State.

2.
Income or gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such income or gains from the alienation of such a permanent establishment (alone or together with the whole enterprise) or of such a fixed base, may be taxed in that other State.
Income or gains from the alienation of ships or aircraft operated by an enterprise of a Contracting 3.

State in international traffic and movable property pertaining to the operation of such ships or aircraft shall be taxable only in the State of which the enterprise is a resident.
Income or gains derived by a resident of one of the Contracting States from the alienation of 4. shares or comparable interests in a company, the assets of which consist directly or indirectly wholly or principally of immovable property in the other Contracting State of a kind referred to in Article 6 and, as provided in that Article, situated in that other State, may be taxed in that other State.
Nothing in this Agreement affects the application of the laws of a Contracting State relating to the 5. taxation of gains of a capital nature derived from the alienation of any property other than that to which any of the preceding paragraphs of this Article apply.
ARTICLE 14 Independent Personal Services Income derived by an individual who is a resident of a Contracting State in respect of professional 1. services or other activities of an independent character shall be taxable only in that State unless such services are performed in the other Contracting State and: (a) a fixed base is regularly available to the individual in the other Contracting State for the purpose of performing the individual's activities; or - 3 4- Income Tax (International Agreements)(Amendment) (b) (c) income is derived by the individual from a resident of that other Contracting State and exceeds an amount of US$10,000.00 or its equivalent in Papua New Guinea Kina in any 365 day period; or the individual is present in the other State for the purpose of performing those services or activities for a period or periods exceeding in the aggregate 183 days in any 365 day period commencing or ending in the year of the income concerned.
If the provisions of Sub-paragraphs (a), (b) or (c) are satisfied, the income may be taxed in that other State but only so much of it as is attributable to activities performed during such period or periods or from that fixed base.

The term "professional services" includes especially independent scientific, literary, artistic, 2. educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants.
ARTICLE 15 Dependent Personal Services Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other similar remuneration 1. derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State.

If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.

2.
Notwithstanding the provisions of Paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if: (a) (b) (c) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any 365 day period commencing or ending in the income year concerned; and the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and the remuneration is neither borne by nor deductible in determining the profits attributable to a permanent establishment or a fixed base which the employer has in the other State.
Notwithstanding the preceding provisions of this Article, remuneration derived by an enterprise of 3. a Contracting State in respect of an employment exercised aboard a ship or aircraft operated in international traffic shall be taxable only in that State.
ARTICLE 16 Directors' Fees Directors' fees and other similar payments derived by a resident of a Contracting State in that person's capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State.

-35- Income Tax (International Agreements) (Amendment) ARTICLE 17 Entertainers and Sportspersons Notwithstanding the provisions of Articles 7, 14 and 15, income derived by a resident of a 1.
Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsperson, from that person's personal activities as such exercised in the other Contracting State, may be taxed in that other State.

2.
2.

Where income in respect of personal activities exercised by an entertainer or a sportsperson in that person's capacity as such accrues not to the entertainer or sportsperson but to another person, that income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised.

3.
3.

Notwithstanding the provisions of Paragraphs 1 and 2 of this Article, income derived by entertainers or sportspersons who are residents of a Contracting State from the activities exercised in the other Contracting State under a special programme of cultural exchange agreed upon between the governments of both Contracting States, shall be exempt from tax in that other State.
ARTICLE 18 Pensions Pensions (including government service pensions) and other similar remuneration for past 1. employment or any life annuity arising in a Contracting State and paid to a resident of the other Contracting State shall be taxable only in that other State.

2.
2.

The term "annuity" includes a stated sum payable periodically at stated times, during life or during a specified or ascertainable period of time, under an obligation to make the payments in return for adequate and full consideration in money or money's worth.

Pensions and other payments made under the social security legislation of a Contracting State to a 3. resident of the other Contracting State shall be taxable only in that other State.

ARTICLE 19 Government Service 1.
(a) Salaries, wages and other similar remuneration (other than a pension) paid by a Contracting State or a political subdivision or a local authority to any individual in respect of services rendered to that State or political subdivision or local authority shall be taxable only in that State; (b) However, such salaries, wages or other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that other State and the individual is a resident of that other State who: (i) is a national of that other State; or -36- Income Tax (International Agreements) (Amendment) (ii) did not become a resident of that other State solely for the purpose of rendering the services.
2.

The provisions of Articles 15, 16 and 17 shall apply to salaries, wages and other similar remuneration in respect of services rendered in connection with any trade or business carried on by a Contracting State, a political subdivision or a local authority.
ARTICLE 20 Students and Trainees Payments which a student or business trainee or apprentice who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the first-mentioned State solely for the purpose of their education or training receives for the purpose of their maintenance, education or training shall not be taxed in that State, provided that such payments arise from sources outside that State.
ARTICLE 21 Other Income Items of income of a resident of a Contracting State, wherever arising, not dealt with in the 1. foregoing Articles of this Agreement shall be taxable only in that State.

2.
The provisions of Paragraph 1 shall not apply to income, other than income from immovable property as defined in Paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base.
In such case, the provisions of Article 7 or Article 14, as the case may be, shall apply.

Notwithstanding the provisions of Paragraphs 1 and 2, items of income of a resident of a 3.

Contracting State not dealt with in the foregoing Articles of this Agreement and arising in the other Contracting State may also be taxed in that other State.
ARTICLE 22 Elimination of Double Taxation Subject to the provisions of the laws of Papua New Guinea from time to time in force which 1. relate to the allowance of a credit against Papua New Guinea tax of tax paid in a country outside Papua New Guinea, New Zealand tax payable under the laws of New Zealand and in accordance with this Agreement, whether directly or by deduction, in respect of income derived by a person who is a resident of Papua New Guinea for the purposes of the law of Papua New Guinea relating to Papua New Guinea tax from sources in New Zealand (not including, in the case of a dividend, tax paid in respect of the profits out of which the dividend is paid) shall be allowed as a credit against Papua New Guinea tax payable in respect of that income.
- 3 7- Income Tax (International Agreements) (Amendment) Subject to the provisions of the laws of New Zealand which relate to the allowance of a credit 2. against New Zealand tax of tax paid in a country outside New Zealand (which shall not affect the general principle of this Article), Papua New Guinea tax paid under the laws of Papua New Guinea and consistent with this Agreement, in respect of income derived by a resident of New Zealand from sources in Papua New Guinea (excluding, in the case of a dividend, tax paid in respect of the profits out of which the dividend is paid) shall be allowed as a credit against New Zealand tax payable in respect of that income.
For the purpose of Paragraphs 2, Papua New Guinea tax paid shall include an amount equivalent 3. to the amount of any Papua New Guinea tax forgone.
In Paragraph 3, the term "Papua New Guinea tax forgone" means an amount which, under the law 4. of Papua New Guinea relating to Papua New Guinea tax and in accordance with this Agreement, would have been payable as Papua New Guinea tax on income but for an exemption from, or a reduction of, Papua New Guinea tax on that income resulting from the operation of those provisions of the laws of Papua New Guinea which the Government of New Zealand and the Government of the Independent State of Papua New Guinea agree from time to time in letters exchanged for this purpose to be provisions to which this paragraph applies.
Subject to its terms, such an agreement on applicable provisions shall be valid for as long as those provisions are not modified after the date of that agreement or have been modified only in minor respects so as not to affect their general character.

Paragraphs 3 and 4 shall apply only in relation to those years of income that may be agreed by the 5.

Government of New Zealand and the Government of the Independent State of Papua New Guinea in letters exchanged for this purpose.
Notwithstanding Paragraphs 3, 4 and 5, a New Zealand resident deriving income from Papua New 6.
Guinea, being income referred to in those paragraphs, shall not be deemed to have paid Papua New Guinea tax in respect of such income where: (a) (b) the New Zealand resident is a financial institution or is associated with a financial institution; the competent authority of New Zealand considers, after consultation with the competent authority of Papua New Guinea, that it is inappropriate to do so having regard to: (i) (ii) (iii) (iv) whether any prearrangements have been entered into by any person for the purpose of taking advantage of Paragraph 3 for the benefit of that person or any other person; whether any benefit accrues or may accrue to a person who is neither a New Zealand resident nor a Papua New Guinea resident; the prevention of fraud or the avoidance of the taxes to which this Agreement applies; any other matter which either competent authority considers relevant in the particular circumstances of the case, including any submissions from the New Zealand resident concerned.
The provision of Paragraphs 3, 4, 5 and 6 shall only apply for a period of 10 years commencing 7. on the date of which the Agreement enters into force.
-38- Income Tax (International Agreements)(Amendment) ARTICLE 23 Mutual Agreement Procedure Where a person considers that the actions of one or both of the Contracting States result or will 1. result for that person in taxation not in accordance with the provisions of this Agreement, that person may, irrespective of the remedies provided by the domestic law of those States, present a case to the competent authority of the Contracting State of which the person is a resident.
The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the Agreement.

The competent authority shall endeavour, if the claim appears to it to be justified and if it is not 2. itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with the Agreement.
Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States.

3.

The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Agreement.

They may also consult together for the elimination of double taxation in cases not provided for in the Agreement.
The competent authorities of the Contracting States may communicate with each other directly for 4. the purpose of reaching an agreement in the sense of the preceding paragraphs.

ARTICLE 24 Exchange of Information 1.


The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Agreement or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to the Agreement.
The exchange of information is not restricted by Articles 1 and 2.

2.
2.

Any information received under Paragraph 1 by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, the determination of appeals in relation to the taxes referred to in Paragraph 1, or the oversight of the above.
Such persons or authorities shall use the information only for such purposes.

They may disclose the information in public court proceedings or in judicial decisions.

In no case shall the provisions of Paragraphs 1 and 2 be construed so as to impose on a 3.
Contracting State the obligation: (a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State; -39- Income Tax (International Agreements)(Amendment) (b) (c) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State; to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information the disclosure of which would be contrary to public policy.
If information is requested by a Contracting State in accordance with this Article, the other 4.

Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes.
The obligation contained in the preceding sentence is subject to the limitations of Paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information.
In no case shall the provisions of Paragraph 3 be construed to permit a Contracting State to 5. decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person.
ARTICLE 25 Members of Diplomatic Missions and Consular Posts Nothing in this Agreement shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreements.

ARTICLE 26 Entry into Force Each of the Contracting States shall notify the other through diplomatic channels of the completion of the procedures required by its law for the bringing into force of this Agreement.
The Agreement shall enter into force on the date of the later of these notifications and its provisions shall have effect: (a) in New Zealand: (i) in respect of withholding tax on income, profits or gains derived by a non-resident, for amounts paid or credited on or after the first day of the second month next following the date on which the Agreement enters into force; (ii) in respect of other New Zealand tax, for any income year beginning on or after 1 April next following the date on which the Agreement enters into force; (b) in Papua New Guinea: (i) in respect of withholding tax on income that is derived by a non-resident, in relation to income derived on or after the first day of the second month next following the date on which the later of these notifications is given; -40- Income Tax (International Agreements)(Amendment) (ii) in respect of any other Papua New Guinea tax, in relation to income of any year of income beginning on or after 1 January in the calendar year next following that in which the later of these notifications is given.
ARTICLE 27 Termination This Agreement shall remain in force until terminated by a Contracting State.

Either Contracting State may terminate the Agreement, through diplomatic channels, by giving notice of termination on or before 30 June in any calendar year beginning after the expiration of 5 years from the date of its entry into force.
In such event, the Agreement shall cease to have effect: (a) in New Zealand: (i) (ii) in respect of withholding tax on income, profits or gains derived by a non-resident, for amounts paid or credited on or after the first day of the second month next following that in which the notice of termination is given; in respect of other New Zealand tax, for any income year beginning on or after 1 April in the calendar year next following that in which the notice of termination is given; (b) in Papua New Guinea: (i) (ii) in respect of withholding tax on income that is derived by a non-resident, in relation to income derived on or after the first day of the second month next following the date on which the notification is given; in respect of any other Papua New Guinea tax, in relation to income of any year of income beginning on or after 1 January in the calendar year next following that in which the notification is given.
IN WITNESS WHEREOF the undersigned, duly authorised by their respective Governments, have signed this Agreement.

DONE in duplicate at this day of.

, 20.... in the English language.

FOR THE GOVERNMENT OF NEW ZEALAND FOR THE GOVERNMENT OF THE INDEPENDENT STATE OF PAPUA NEW GUINEA".

-41- Income Tax (International Agreements)(Amendment) I hereby certify that the above is a fair print of the Income Tax (International Agreements) (Amendment) Act 2014 which has been made by the National Parliament.
Acting Clerk of the National Parliament.

19 SEP 2014 I hereby certify that the Income Tax (International Agreements)(Amendment) Act 2014 was made by the National Parliament on 13 May 2014.

Speaker of the National Parliament.

1§ SEP - 4 2-