CONVENTION BETWEENJAPAN AND NEW ZEALAND
FOR THE AVOIDANCE OF DOUBLE TAXATION
AND THE PREVENTION OF FISCAL EVASION
WITH RESPECT TO TAXES ON INCOME

CONVENTION BETWEENJAPAN AND NEW ZEALAND
FOR THE AVOIDANCE OF DOUBLE TAXATION
AND THE PREVENTION OF FISCAL EVASION
WITH RESPECT TO TAXES ON INCOME
Japan and New Zealand,
Desiring to conclude a new Convention for the
avoidance of double taxation and the prevention of fiscal
evasion with respect to taxes on income,Have agreed as follows:
Article 1
PERSONS COVEREDThis Convention shall apply to persons who areresidents of one or both of the Contracting States.
Article 2
TAXES COVERED1.

The taxes to which this Convention shall apply are:(a)in the case of Japan:(i)

the income tax;(ii)

the corporation tax;(iii)

the special income tax for reconstruction;
and

(iv)

the special corporation tax forreconstruction;(hereinafter referred to as “Japanese tax”); and(b)in the case of New Zealand:
the income tax(hereinafter referred to as “New Zealand tax”).

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2.
This Convention shall apply also to any identical or
substantially similar taxes that are imposed after the dateof signature of the Convention in addition to, or in placeof, those referred to in paragraph 1. The competentauthorities of the Contracting States shall notify eachother of any significant changes that have been made in
their respective taxation laws, within a reasonable periodof time after such changes.
Article 3
GENERAL DEFINITIONS
1.
For the purposes of this Convention, unless thecontext otherwise requires:(a)the term “Japan”, when used in a geographicalsense, means all the territory of Japan,
including its territorial sea, in which the laws
relating to Japanese tax are in force, and all
the area beyond its territorial sea, including
the seabed and subsoil thereof, over which Japan
has sovereign rights in accordance withinternational law and in which the laws relating
to Japanese tax are in force;(b)

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 inaccordance with international law as an area inwhich New Zealand may exercise sovereign rights
with respect to natural resources;(c)the terms “a Contracting State” and “the other
Contracting State” mean Japan or New Zealand, as
the context requires;(d)the term “tax” means Japanese tax or New Zealandtax, as the context requires;(e)the term “person” includes an individual, acompany and any other body of persons;(f)the term “company” means any body corporate or
any entity that is treated as a body corporate
for tax purposes;(g)the term “enterprise” applies to the carrying onof any business;

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(h)

the terms “enterprise of a Contracting State” and“enterprise of the other Contracting State” mean
respectively an enterprise carried on by aresident of a Contracting State and an enterprise
carried on by a resident of the other Contracting
State;(i)the term “international traffic” means any
transport by a ship or aircraft operated by anenterprise of a Contracting State, except when
the ship or aircraft is operated solely between
places in the other Contracting State;(j)the term “national”, in relation to a Contracting
State, means:

(k)

(l)

(i)

any individual possessing the nationality or
citizenship of that Contracting State; and(ii)

any legal person, partnership or association
deriving its status as such from the laws inforce in that Contracting State;

the term “competent authority” means:(i)in the case of Japan, the Minister ofFinance or an authorised representative of
the Minister of Finance; and(ii)

in the case of New Zealand, the Commissionerof Inland Revenue or an authorised
representative of the Commissioner of Inland
Revenue; andthe term “business” includes the performance ofprofessional services and of other activities ofan independent character.

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

- 3 -Article 4
RESIDENT1.
For the purposes of this Convention, the term
“resident of a Contracting State” means:(a)in the case of Japan, any person who, under thelaws of Japan, is liable to tax therein by reasonof that person’s domicile, residence, place ofhead or main office or any other criterion of asimilar nature; and(b)in the case of New Zealand, any person who, under
the laws of New Zealand, is liable to tax as aresident of New Zealand.

The Government of a Contracting State or a politicalsubdivision or local authority thereof is also a residentof that Contracting State for the purposes of theConvention. A person is not a resident of a Contracting
State for the purposes of the Convention if the person isliable to tax in that Contracting State in respect only of
income from sources in that Contracting State.
2.
Where by reason of the provisions of paragraph 1 an
individual is a resident of both Contracting States, thenthe individual’s status shall be determined as follows:(a)the individual shall be deemed to be a resident
only of the Contracting State in which apermanent home is available to the individual; if
a permanent home is available to the individualin both Contracting States, the individual shallbe deemed to be a resident only of theContracting State with which the individual’s
personal and economic relations are closer(centre of vital interests);(b)

if the Contracting State in which theindividual’s centre of vital interests issituated cannot be determined, or if a permanent
home is not available to the individual in either
Contracting State, the individual shall be deemed
to be a resident only of the Contracting State inwhich the individual has an habitual abode;(c)

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

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(d)

if the individual is a national of bothContracting States or of neither of them, thecompetent authorities of the Contracting Statesshall settle the question by mutual agreement.

3.
Where by reason of the provisions of paragraph 1 aperson other than an individual is a resident of bothContracting States, then the competent authorities of theContracting States shall endeavour to determine by mutual
agreement the Contracting State of which that person shallbe deemed to be a resident for the purposes of thisConvention, having regard to the place of its head or main
office, its place of effective management and any otherrelevant factors. In the absence of a mutual agreement by
the competent authorities of the Contracting States, theperson shall not be considered a resident of either
Contracting State for the purposes of its claiming any
benefits provided by the Convention, except those provided
by Article 25.
4.

(a)Where under this Convention any income isrelieved from tax in a Contracting State and,
under the laws in force in the other Contracting
State, an individual, in respect of that income,is taxed by reference to the amount thereof thatis remitted to or received in that other
Contracting State and not by reference to thefull amount thereof, then the relief to beallowed under the Convention in the firstmentioned Contracting State shall apply only toso much of that income as is taxed in the other
Contracting State.

(b)

Where under this Convention any income isrelieved from tax in a Contracting State and,
under the laws in force in the other Contracting
State, an individual, in respect of that income,is exempt from tax by virtue of being a temporary
resident of that other Contracting State within
the meaning of the applicable law of that other
Contracting State, then the relief to be allowed
under the Convention in the first-mentioned
Contracting State shall not apply to the extent
that that income is exempt from tax in the other
Contracting State.

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5.

For the purposes of applying this Convention:(a)an item of income:(i)derived from a Contracting State through anentity that is organised in the other
Contracting State; and(ii)

treated as the income of the beneficiaries,
members or participants of that entity under
the tax law of that other Contracting State,shall be eligible for the benefits of theConvention that would be granted if it weredirectly derived by a beneficiary, member orparticipant of that entity who is a resident ofthat other Contracting State, to the extent thatsuch beneficiaries, members or participants areresidents of that other Contracting State andsatisfy any other conditions specified in theConvention, without regard to whether the income
is treated as the income of such beneficiaries,
members or participants under the tax law of thefirst-mentioned Contracting State.
(b)an item of income:(i)derived from a Contracting State through anentity that is organised in the other
Contracting State; and(ii)

treated as the income of that entity under
the tax law of that other Contracting State,shall be eligible for the benefits of theConvention that would be granted to a resident ofthat other Contracting State, without regard towhether the income is treated as the income ofthe entity under the tax law of the firstmentioned Contracting State, if such entity is a
resident of that other Contracting State andsatisfies any other conditions specified in theConvention.
(c)an item of income:(i)derived from a Contracting State through anentity that is organised in a state otherthan the Contracting States; and

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(ii)

treated as the income of the beneficiaries,
members or participants of that entity under
the tax law of the other Contracting State,shall be eligible for the benefits of theConvention that would be granted if it weredirectly derived by a beneficiary, member orparticipant of that entity who is a resident ofthat other Contracting State, to the extent thatsuch beneficiaries, members or participants areresidents of that other Contracting State andsatisfy any other conditions specified in theConvention, without regard to whether the income
is treated as the income of such beneficiaries,
members or participants under the tax law of thefirst-mentioned Contracting State or the state
where the entity is organised.
(d)an item of income:(i)derived from a Contracting State through anentity that is organised in a state otherthan the Contracting States; and(ii)

treated as the income of that entity under
the tax law of the other Contracting State,shall not be eligible for the benefits of theConvention.
(e)an item of income:(i)derived from a Contracting State through anentity that is organised in that Contracting
State; and(ii)

treated as the income of that entity under
the tax law of the other Contracting State,shall not be eligible for the benefits of theConvention.
Article 5
PERMANENT ESTABLISHMENT
1.
For the purposes of this Convention, the term
“permanent establishment” means a fixed place of businessthrough which the business of an enterprise is wholly or
partly carried on.
2.
The term “permanent establishment” includes
especially:

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(a)

a place of management;(b)a branch;(c)an office;(d)a factory;(e)a workshop; and(f)a mine, an oil or gas well, a quarry or any otherplace of extraction of natural resources.

3.
A building site or construction or installation
project constitutes a permanent establishment only if it
lasts more than twelve months.
4.
Notwithstanding the provisions of paragraphs 1, 2 and3, an enterprise shall be deemed to have a permanentestablishment in a Contracting State and to carry on
business through that permanent establishment if, for aperiod or periods exceeding in the aggregate 90 days in any
twelve month period, it carries on activities (including
the operation of substantial equipment) in that Contracting
State which consist of, or which are connected with, theexploration for or the exploitation of natural resources,
including standing timber, situated in that Contracting
State.
5.
Notwithstanding the provisions of paragraphs 1, 2 and3, where an enterprise of a Contracting State performs
services in the other Contracting State:(a)through an individual who is present in that
other Contracting State for a period or periods
exceeding in the aggregate 183 days in any twelve
month period, and more than 50 per cent of thegross revenues attributable to active businessactivities of the enterprise during this period
or periods are derived from the services
performed in that other Contracting State throughthat individual, or(b)

for a period or periods exceeding in theaggregate 183 days in any twelve month period,
and these services are performed for the same
project or for connected projects through one ormore individuals who are present and performing
such services in that other Contracting State,- 8 -the activities carried on in that other Contracting Statein performing these services shall be deemed to be carriedon through a permanent establishment of the enterprisesituated in that other Contracting State, unless these
services are limited to those mentioned in paragraph 7
which, if performed through a fixed place of business,would not make the fixed place of business a permanentestablishment under the provisions of that paragraph. For
the purposes of this paragraph, services performed by anindividual on behalf of one enterprise shall not be
considered to be performed by another enterprise throughthat individual unless that other enterprise supervises,
directs or controls the manner in which these services are
performed by the individual.
6.

(a)

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

(b)

The period during which two or more associatedenterprises are carrying on concurrent activities
shall be counted only once for the purpose ofdetermining the duration of activities.

(c)

For the purposes of this Article, an enterpriseshall be deemed to be associated with anotherenterprise if:(i)an enterprise participates directly or
indirectly in the management, control orcapital of the other enterprise; or(ii)

the same persons participate directly or
indirectly in the management, control orcapital of the enterprises.

7.
Notwithstanding the preceding provisions of this
Article, the term “permanent establishment” shall be deemed
not to include:(a)the use of facilities solely for the purpose ofstorage, display or delivery of goods ormerchandise belonging to the enterprise;(b)

the maintenance of a stock of goods ormerchandise belonging to the enterprise solely
for the purpose of storage, display or delivery;

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(c)

the maintenance of a stock of goods ormerchandise belonging to the enterprise solely
for the purpose of processing by anotherenterprise;(d)the maintenance of a fixed place of businesssolely for the purpose of purchasing goods ormerchandise or of collecting information, for theenterprise;(e)the maintenance of a fixed place of businesssolely for the purpose of carrying on, for theenterprise, any other activity of a preparatory
or auxiliary character;(f)the maintenance of a fixed place of businesssolely for any combination of activities
mentioned in subparagraphs (a) to (e), provided
that the overall activity of the fixed place ofbusiness resulting from this combination is of apreparatory or auxiliary character.

8.
Notwithstanding the provisions of paragraphs 1 and 2,
where a person – other than an agent of an independent
status to whom the provisions of paragraph 9 apply – isacting on behalf of an enterprise and:(a)has, and habitually exercises, in a Contracting
State an authority to conclude contracts in thename of the enterprise; or(b)manufactures or processes in a Contracting Statefor the enterprise goods or merchandise belonging
to the enterprise which participates in the
management, control or capital of the person, andany of those goods or merchandise are sold to aresident of that Contracting State,that enterprise shall be deemed to have a permanentestablishment in that Contracting State in respect of any
activities which that person undertakes for the enterprise,
unless the activities of such person are limited to thosementioned in paragraph 7 which, if exercised through afixed place of business, would not make this fixed place ofbusiness a permanent establishment under the provisions ofthat paragraph.

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9.
An enterprise shall not be deemed to have a permanentestablishment in a Contracting State merely because it
carries on business in that Contracting State through 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.
10. The fact that a company which is a resident of aContracting State controls or is controlled by a company
which is a resident of the other Contracting State, or
which carries on business in that other Contracting State(whether through a permanent establishment or otherwise),shall not of itself constitute either company a permanentestablishment of the other.
Article 6
INCOME FROM IMMOVABLE PROPERTY
1.
Income derived by a resident of a Contracting State
from immovable property (including income from agriculture,
forestry or fishing) situated in the other Contracting
State may be taxed in that other Contracting State.
2.
The term “immovable property” shall have the meaning
which it has under the law of the Contracting State inwhich the property in question is situated. The term shallin any case include property accessory to immovable
property, livestock and equipment used in agriculture andforestry, rights to which the provisions of general law
respecting immovable property apply, usufruct of immovable
property, rights to explore for or exploit natural
resources or standing timber, and rights to variable orfixed payments either as consideration for or in respect of
the exploration for or the exploitation of, or the right toexplore for or exploit, natural resources or standing
timber; ships and aircraft shall not be regarded as
immovable property.
3.
The provisions of paragraph 1 shall apply to income
derived from the direct use, letting, or use in any otherform of immovable property.
4.
The provisions of paragraphs 1 and 3 shall also apply
to the income from immovable property of an enterprise.
5.
Any right referred to in paragraph 2 shall be regarded
as situated where the property to which it relates issituated or where the exploration or exploitation may takeplace.

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Article 7
BUSINESS PROFITS
1.
The profits of an enterprise of a Contracting State
shall be taxable only in that Contracting State unless theenterprise carries on business in the other Contracting
State through a permanent establishment situated therein.
If the enterprise carries on business as aforesaid, theprofits of the enterprise may be taxed in that other
Contracting State but only so much of them as is
attributable to that permanent establishment.
2.
Subject to the provisions of paragraph 3, where an
enterprise of a Contracting State carries on business inthe other Contracting State through a permanentestablishment situated therein, there shall in eachContracting State be attributed to that permanentestablishment the profits which it might be expected tomake if it were a distinct and separate enterprise engaged
in the same or similar activities under the same or similar
conditions and dealing wholly independently with theenterprise of which it is a permanent establishment.
3.
In determining the profits of a permanentestablishment, there shall be allowed as deductions
expenses which are incurred for the purposes of thepermanent establishment, including executive and generaladministrative expenses so incurred, whether in theContracting State in which the permanent establishment issituated or elsewhere.
4.
No profits shall be attributed to a permanentestablishment by reason of the mere purchase by thatpermanent establishment of goods or merchandise for theenterprise.
5.
For the purposes of the preceding paragraphs of this
Article, the profits to be attributed to the permanentestablishment shall be determined by the same method year
by year unless there is good and sufficient reason to thecontrary.
6.

Where:(a)a resident of a Contracting State is beneficiallyentitled, whether directly or through one or moreinterposed trusts, to a share of the profits
derived from business 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) in its capacity as trustee; and- 12 -

(b)in relation to the carrying on of the business,that trustee, in accordance with the principles
stated in Article 5, has a permanentestablishment in that other Contracting State,

the business carried on by the trustee shall be deemed to
be a business carried on in that other Contracting State bythat resident through a permanent establishment situatedtherein and the share of the profits shall be attributed tothat permanent establishment.
7.
Where profits include items of income which are dealt
with separately in other Articles of this Convention, thenthe provisions of those Articles shall not be affected by
the provisions of this Article.
8.
Notwithstanding the other provisions of this Article,
an enterprise of a Contracting State that derives income
from any form of insurance, other than life insurance, inthe form of premiums paid for the insurance of risks
situated in that other Contracting State, may be taxed onsuch income in the other Contracting State in accordancewith the laws of that other Contracting State which are inforce on the date of signature of this Convention, or are
substantially similar in general principle to any suchprovision but are enacted and have effect after the date ofsignature of the Convention.
Article 8
SHIPPING AND AIR TRANSPORT
1.
Profits from the operation of ships or aircraft ininternational traffic carried on by an enterprise of aContracting State shall be taxable only in that Contracting
State.
2.
Notwithstanding the provisions of Article 2, provided
that no political subdivision or local authority of New
Zealand levies a tax similar to the local inhabitant taxes
or the enterprise tax in Japan in respect of the operationof ships or aircraft in international traffic carried on by
an enterprise of Japan, an enterprise of New Zealand shallbe exempt from the local inhabitant taxes and theenterprise tax in Japan in respect of the operation ofships or aircraft in international traffic.

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3.
Notwithstanding the provisions of paragraph 1, profits
referred to in that paragraph which are derived by anenterprise of a Contracting State from carriage by ship or
aircraft of passengers, livestock, mail, goods ormerchandise which are shipped or embarked in the other
Contracting State and are discharged at a place in that
other Contracting State may be taxed in that other
Contracting State.
4.
The provisions of paragraphs 1, 2 and 3 shall also
apply to profits from the participation in a pool, a joint
business or an international operating agency.
Article 9
ASSOCIATED ENTERPRISES
1.

Where
(a)

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(b)

the same persons participate directly or
indirectly in the management, control or capitalof 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 madebetween independent enterprises, then any profits which
would, but for those conditions, have accrued to one of theenterprises, but, by reason of those conditions, have notso accrued, may be included in the profits of thatenterprise and taxed accordingly.
2.
Where a Contracting State includes in the profits ofan enterprise of that Contracting State - and taxes
accordingly - profits on which an enterprise of the other
Contracting State has been charged to tax in that other
Contracting State and the profits so included are profits
which would have accrued to the enterprise of the firstmentioned Contracting State if the conditions made between
the two enterprises had been those which would have been
made between independent enterprises, then that other
Contracting State shall make an appropriate adjustment tothe amount of the tax charged therein on those profits. In
determining such adjustment, due regard shall be had to theother provisions of this Convention and the competentauthorities of the Contracting States shall if necessary
consult each other.

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3.
Notwithstanding the provisions of paragraph 1, aContracting State shall not change the profits of anenterprise of that Contracting State in the circumstancesreferred to in that paragraph after ten years from the endof the taxable year in which the profits that would be
subjected to such change would, but for the conditions
referred to in that paragraph, have accrued to thatenterprise. The provisions of this paragraph shall not
apply in the case of fraud or wilful default.
Article 10
DIVIDENDS
1.
Dividends paid by a company which is a resident of aContracting State to a resident of the other Contracting
State may be taxed in that other Contracting State.
2.
However, such dividends may also be taxed in theContracting State of which the company paying the dividends
is a resident and according to the laws of that Contracting
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 thedividends.
3.
Notwithstanding the provisions of paragraph 2,
dividends shall not be taxed in the Contracting State ofwhich the company paying the dividends is a resident if thebeneficial owner of the dividends is a resident of theother Contracting State and is a company that has owned
directly or indirectly, for the period of six months endingon the date on which entitlement to the dividends isdetermined, at least 10 per cent of the voting power of thecompany paying the dividends and the company that is thebeneficial owner of the dividends:(a)

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

has at least 50 per cent of its voting power in
the aggregate owned directly or indirectly by
five or fewer companies referred to in
subparagraph (a); or(c)is granted benefits with respect to those
dividends under paragraph 5 of Article 22.

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

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5.
The provisions of paragraph 3 shall not apply in thecase of dividends paid by a company which is entitled to a
deduction for dividends paid to its beneficiaries incomputing its taxable income in the Contracting State ofwhich the company is a resident.
6.
The term “dividends” as used in this Article means
income from shares or other rights, not being debt-claims,
participating in profits, as well as income which is
subjected to the same taxation treatment as income fromshares by the tax laws of the Contracting State of which
the company making the distribution is a resident.
7.
The provisions of paragraphs 1, 2 and 3 shall not
apply if the beneficial owner of the dividends, being a
resident of a Contracting State, carries on business in theother Contracting State of which the company paying thedividends is a resident through a permanent establishment
situated therein and the holding in respect of which thedividends are paid is effectively connected with suchpermanent establishment. In such case the provisions ofArticle 7 shall apply.
8.
Where a company which is a resident of a Contracting
State derives profits or income from the other Contracting
State, that other Contracting 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
Contracting State or insofar as the holding in respect ofwhich the dividends are paid is effectively connected witha permanent establishment situated in that other
Contracting 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 insuch other Contracting State.
Article 11
INTEREST
1.
Interest arising in a Contracting State and paid to aresident of the other Contracting State may be taxed inthat other Contracting State.
2.
However, such interest may also be taxed in theContracting State in which it arises and according to thelaws of that Contracting State, but if the beneficial ownerof the interest is a resident of the other Contracting
State, the tax so charged shall not exceed 10 per cent of
the gross amount of the interest.

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3.
Notwithstanding the provisions of paragraph 2,interest arising in a Contracting State shall be taxable
only in the other Contracting State if:(a)the interest is beneficially owned by theGovernment of that other Contracting State, apolitical subdivision or local authority thereof,or the central bank of that other Contracting
State or any institution wholly owned by that
Government;(b)

the interest is beneficially owned by a residentof that other Contracting State with respect to
debt-claims guaranteed, insured or indirectly
financed by the Government of that other
Contracting State, a political subdivision or
local authority thereof, or the central bank ofthat other Contracting State or any institution
wholly owned by that Government; or(c)the interest is beneficially owned by a residentof the other Contracting State that is afinancial institution that is unrelated to anddealing wholly independently with the payer. For
the purposes of this Article, the term “financial
institution” means a bank or other enterprise
substantially deriving its profits by raisingdebt finance in the financial markets or bytaking deposits at interest and using those funds
in carrying on a business of providing finance.

4.
For the purposes of paragraph 3, the terms “thecentral bank” and “institution wholly owned by that
Government” mean:(a)in the case of Japan:(i)the Bank of Japan;(ii)

the Japan Bank for International
Cooperation;(iii)

the Japan International Cooperation Agency;
and

(iv)

the Nippon Export and Investment Insurance;- 17 -

(b)in the case of New Zealand:
the Reserve Bank of New Zealand;(c) such other similar institution the capital ofwhich is wholly owned by the Government of aContracting State as may be agreed upon from time
to time between the Governments of the Contracting
States through an exchange of diplomatic notes.
5.
Notwithstanding paragraph 3, interest referred to in
subparagraph (c) of that paragraph may be taxed in theContracting State in which it arises at a rate notexceeding 10 per cent of the gross amount of the interest
if:(a)in the case of interest arising in New Zealand,
it is paid by a person that has not paid approved
issuer levy in respect of the interest. Thissubparagraph (a) shall not apply if New Zealanddoes not have an approved issuer levy, or thepayer of the interest is not eligible to elect to
pay the approved issuer levy, or if the rate of
the approved issuer levy payable in respect ofsuch interest exceeds two percent of the grossamount of the interest. For the purposes of this
Article, “approved issuer levy” includes any
identical or substantially similar charge payable
by the payer of interest arising in New Zealandenacted after the date of signature of thisConvention in place of approved issuer levy; or(b)

it is paid as part of an arrangement involving
back-to-back loans or other arrangement that is
economically equivalent and intended to have asimilar effect to an arrangement involving backto-back loans.

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6.
The term “interest” as used in this Article means
income from debt-claims of every kind, whether or notsecured by mortgage and whether or not carrying a right toparticipate in the debtor’s profits, and in particular,
income from government securities and income from bonds ordebentures, including premiums and prizes attaching to suchsecurities, bonds or debentures, and all other income thatis subjected to the same taxation treatment as income frommoney lent by the tax laws of the Contracting State inwhich the income arises. Income dealt with in Article 10
shall not be regarded as interest for the purposes of thisConvention.
7.
The provisions of paragraphs 1, 2 and 3 shall not
apply if the beneficial owner of the interest, being a
resident of a Contracting State, carries on business in theother Contracting State in which the interest arises
through a permanent establishment situated therein and thedebt-claim in respect of which the interest is paid iseffectively connected with such permanent establishment.
In such case the provisions of Article 7 shall apply.
8.
Interest shall be deemed to arise in a Contracting
State when the payer is a resident of that Contracting
State. Where, however, the person paying the interest,
whether the person is a resident of a Contracting State ornot, has in a Contracting State a permanent establishment
in connection with which the indebtedness on which theinterest is paid was incurred, and such interest is borneby such permanent establishment, then such interest shallbe deemed to arise in the Contracting State in which thepermanent establishment is situated.
9.
Where, by reason of a special relationship between thepayer and the beneficial owner or between both of them andsome other person, the amount of the interest, having
regard to the debt-claim for which it is paid, exceeds theamount which would have been agreed upon by the payer andthe beneficial owner in the absence of such relationship,
the provisions of this Article shall apply only to thelast-mentioned amount. In such case, the excess part ofthe payments shall remain taxable according to the laws ofeach Contracting State, due regard being had to the otherprovisions of this Convention.
Article 12
ROYALTIES
1.
Royalties arising in a Contracting State and paid to aresident of the other Contracting State may be taxed inthat other Contracting State.

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2.
However, such royalties may also be taxed in theContracting State in which they arise, and according to thelaws of that Contracting State, but if the beneficial ownerof the royalties is a resident of the other Contracting
State, the tax so charged shall not exceed 5 per cent of
the gross amount of the royalties.
3.
The term “royalties” as used in this Article means
payments of any kind received as a consideration for:(a)the use of, or the right to use, any copyright,
patent, design or model, plan, secret formula orprocess, trademark or other like property orright;(b)

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

total or partial forbearance in respect of theuse 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 residentof a Contracting State, carries on business in the other
Contracting State in which the royalties arise through apermanent establishment situated therein and the right orproperty in respect of which the royalties are paid iseffectively connected with such permanent establishment.
In such case the provisions of Article 7 shall apply.
5.
Royalties shall be deemed to arise in a Contracting
State when the payer is a resident of that Contracting
State. Where, however, the person paying the royalties,
whether the person is a resident of a Contracting State ornot, has in a Contracting State a permanent establishment
in connection with which the liability to pay the royalties
was incurred, and the royalties are borne by such permanentestablishment, then the royalties shall be deemed to arisein the Contracting State in which the permanentestablishment is situated.

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6.
Where, by reason of a special relationship between thepayer and the beneficial owner or between both of them andsome other person, the amount of the royalties, having
regard to what they are paid for, exceeds the amount which
would have been agreed upon by the payer and the beneficial
owner in the absence of such relationship, the provisionsof 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 eachContracting State, due regard being had to the otherprovisions of this Convention.
Article 13
ALIENATION OF PROPERTY
1.
Income, profits or gains derived by a resident of aContracting 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 Contracting
State.
2.
Income, profits or gains derived by a resident of aContracting State from the alienation of shares orinterests in a company, partnership or trust deriving atleast 50 per cent of the value of its property directly or
indirectly from immovable property referred to in Article 6
and situated in the other Contracting State may be taxed inthat other Contracting State, unless the relevant class ofthe shares or the interests is traded on a recognised stock
exchange specified in subparagraph (c) of paragraph 6 of
Article 22 and the resident and persons related orconnected to that resident own in the aggregate 5 per centor less of that class of the shares or the interests.
3.

Where
(a)

the Government of Japan (including the Deposit
Insurance Corporation of Japan) provides,
pursuant to the laws of Japan concerning failure
resolution involving imminent insolvency offinancial institutions, substantial financial
assistance to a financial institution that is a
resident of Japan; and(b)a resident of New Zealand acquires shares in thefinancial institution from the Government ofJapan,

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

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4.
Income, profits or gains from the alienation of any
property, other than immovable property, forming part ofthe business property of a permanent establishment which anenterprise of a Contracting State has in the other
Contracting State, including such income, profits or gains
from the alienation of such a permanent establishment(alone or with the whole enterprise), may be taxed in that
other Contracting State.
5.
Income, profits or gains derived by an enterprise of aContracting State from the alienation of ships or aircraft
operated by that enterprise in international traffic, or
any property, other than immovable property, pertaining tothe operation of such ships or aircraft shall be taxable
only in that Contracting State.
6.
Income, profit or gains from the alienation of any
property other than that referred to in the preceding
paragraphs of this Article shall be taxable only in theContracting State of which the alienator is a resident.
Article 14
INCOME FROM EMPLOYMENT
1.
Subject to the provisions of Articles 15, 17 and 18,
salaries, wages and other similar remuneration derived by aresident of a Contracting State in respect of an employment
shall be taxable only in that Contracting State unless theemployment is exercised in the other Contracting State. If
the employment is so exercised, such remuneration as isderived therefrom may be taxed in that other Contracting
State.
2.
Notwithstanding the provisions of paragraph 1,
remuneration derived by a resident of a Contracting Statein respect of an employment exercised in the other
Contracting State shall be taxable only in the firstmentioned Contracting State if:(a)the recipient is present in that other
Contracting State for a period or periods notexceeding in the aggregate 183 days in any twelve
month period commencing or ending in the taxable
year concerned, and(b)

the remuneration is paid by, or on behalf of, anemployer who is not a resident of that other
Contracting State, and(c)the remuneration is not borne by a permanentestablishment which the employer has in that
other Contracting State.

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3.
Notwithstanding the preceding provisions of this
Article, remuneration derived in respect of an employment
exercised aboard a ship or aircraft operated ininternational traffic by an enterprise of a Contracting
State may be taxed in that Contracting State.
Article 15
DIRECTORS’ FEES
Directors’ fees and other similar payments derived bya resident of a Contracting State in that person’s capacity
as a member of the board of directors of a company which isa resident of the other Contracting State may be taxed inthat other Contracting State.
Article 16
ENTERTAINERS AND SPORTSPERSONS
1.
Notwithstanding the provisions of Articles 7 and 14,
income derived by a resident of a Contracting State as anentertainer, such as a theatre, motion picture, radio 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
Contracting State.
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 and 14, be
taxed in the Contracting State in which the activities ofthe entertainer or sportsperson are exercised.
Article 17
PENSIONS
Subject to the provisions of paragraph 2 of Article
18, pensions and other similar remuneration, including
payments under the social security legislation of aContracting State, paid to a resident of a Contracting
State shall be taxable only in that Contracting State.
Article 18
GOVERNMENT SERVICE
1.

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

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(b)2.

However, such salaries, wages and other similar
remuneration shall be taxable only in the other
Contracting State if the services are rendered inthat other Contracting State and the individual
is a resident of that other Contracting State
who:
(i)

is a national of that other Contracting
State; or(ii)

did not become a resident of that other
Contracting State solely for the purpose of
rendering the services.

(a)

Notwithstanding the provisions of paragraph 1,
pensions and other similar remuneration paid by,or out of funds to which contributions are madeor created by, a Contracting State or a politicalsubdivision or local authority thereof to anindividual in respect of services rendered tothat Contracting State or political subdivisionor local authority shall be taxable only in thatContracting State.

(b)

However, such pensions and other similar
remuneration shall be taxable only in the other
Contracting State if the individual is a residentof, and a national of, that other Contracting
State.

3.
The provisions of Articles 14, 15, 16 and 17 shallapply to salaries, wages, pensions, and other similar
remuneration in respect of services rendered in connection
with a business carried on by a Contracting State or apolitical subdivision or local authority thereof.
Article 19
STUDENTS
Payments which a student or business apprentice who isor was immediately before visiting a Contracting State aresident of the other Contracting State and who is present
in the first-mentioned Contracting State solely for the
purpose of that person’s education or training receives forthe purpose of that person’s maintenance, education ortraining shall not be taxed in the first-mentioned
Contracting State, provided that such payments arise fromsources outside the first-mentioned Contracting State. The
exemption provided by this Article shall apply to abusiness apprentice only for a period not exceeding one
year from the date on which the person first begins that
person’s training in the first-mentioned Contracting State.

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Article 20
SILENT PARTNERSHIP
Notwithstanding any other provisions of thisConvention, any income and gains derived by a silent
partner in respect of a silent partnership (Tokumei Kumiai)
contract or other similar contract may be taxed in theContracting State in which such income and gains arise andaccording to the laws of that Contracting State.
Article 21
OTHER INCOME
1.
Items of income of a resident of a Contracting State,
wherever arising, not dealt with in the foregoing Articlesof this Convention shall be taxable only in thatContracting State.
2.
The provisions of paragraph 1 shall not apply toincome, other than income from immovable property as
defined in paragraph 2 of Article 6, if the recipient ofsuch income, being a resident of a Contracting State,carries on business in the other Contracting State througha permanent establishment situated therein and the right orproperty in respect of which the income is paid iseffectively connected with such permanent establishment.
In such case the provisions of Article 7 shall apply.
3.
Notwithstanding the provisions of paragraphs 1 and 2,
items of income of a resident of a Contracting State notdealt with in the foregoing Articles of this Convention andarising in the other Contracting State may also be taxed inthat other Contracting State.
Article 22
LIMITATION ON BENEFITS
1.
Except as otherwise provided in this Article, aresident of a Contracting State that derives income
described in paragraph 3 of Article 11 or Article 13 fromthe other Contracting State shall be entitled to thebenefits granted for a taxable year by the provisions of
those paragraphs or Articles only if such resident is aqualified person as defined in paragraph 2 and satisfies
any other specified conditions in those paragraphs or
Articles for the obtaining of such benefits.
2.
A resident of a Contracting State is a qualified
person for a taxable year only if such resident is either:(a)an individual;- 25 -

(b)a qualified governmental entity;(c)a company, if its principal class of shares islisted or registered on a recognised stock
exchange specified in clause (i) or (ii) of
subparagraph (c) of paragraph 6 and is regularly
traded on one or more recognised stock exchanges;(d)a pension fund, provided that as of the end of
the prior taxable year more than 50 per cent of
its beneficiaries, members or participants areindividuals who are residents of either
Contracting State;(e)an organisation established under the law of thatContracting State and operated exclusively for areligious, charitable, educational, scientific,
artistic, cultural or public purposes, provided
that all or part of its income may be exempt fromtax under the domestic law of that Contracting
State; or(f)a person other than an individual, if residentsof either Contracting State that are qualified
persons by reason of subparagraph (a), (b), (c),(d) or (e) of this paragraph own, directly or
indirectly, at least 50 per cent of the voting
power or other beneficial interests of theperson.

3.
Where the provisions of subparagraph (f) ofparagraph 2 apply:(a)in respect of taxation by withholding at source,a resident of a Contracting State shall beconsidered to satisfy the conditions described inthat subparagraph for the taxable year in which
payment of an item of income is made if such
resident satisfies those conditions during thetwelve month period preceding the date of thepayment;(b)

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

- 26 -

4.

(a)

(b)

Notwithstanding that a resident of a Contracting
State may not be a qualified person, that
resident shall be entitled to the benefits
granted by the provisions of paragraph 3 ofArticle 11 or Article 13 with respect to an itemof income described in those paragraphs or
Articles derived from the other Contracting Stateif:(i)the resident is carrying on business in thefirst-mentioned Contracting State (otherthan the business of making or managing
investments for the resident’s own account,unless the business is banking, insurance or
securities business carried on by a bank,insurance company or securities dealer);(ii)

the income derived from that other
Contracting State is derived in connection
with, or is incidental to, that business;
and

(iii)

that resident satisfies any other specified
conditions in those paragraphs or Articles
for the obtaining of such benefits.

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

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(c)In determining whether a person is carrying on
business in a Contracting State undersubparagraph (a) of this paragraph, the businessconducted by a partnership in which that person
is a partner and the business conducted bypersons connected to such person shall be deemed
to be conducted by such person. A person shallbe connected to another if one owns, directly or
indirectly, at least 50 per cent of thebeneficial interests in the other (or, in thecase of a company, at least 50 per cent of thevoting power of the company) or another person
owns, directly or indirectly, at least 50 per
cent of the beneficial interests (or, in the caseof a company, at least 50 per cent of the voting
power of the company) in each person. In any
case, a person shall be considered to beconnected to another if, on the basis of all thefacts and circumstances, one has control of theother or both are under the control of the same
person or persons.

5.
A resident of a Contracting State that is neither aqualified person nor entitled under paragraph 4 to thebenefits granted by the provisions of paragraph 3 ofArticle 11 or Article 13 with respect to an item of income
described in those paragraphs or Articles, or is a company
that is not entitled to the benefits of paragraph 3 ofArticle 10 because the company does not meet therequirements of subparagraphs (a) or (b) of paragraph 3 ofArticle 10, shall nevertheless be granted such benefits if
the competent authority of the other Contracting State
determines, in accordance with its domestic law oradministrative practice, that the establishment,
acquisition or maintenance of such resident and the conductof its operations are considered as not having theobtaining of such benefits as one of the principal
purposes.
6.

For the purposes of this Article:(a)the term “qualified governmental entity” means
the Government of a Contracting State, any
political subdivision or local authority thereof,
the Bank of Japan, the Reserve Bank of New
Zealand or a person that is wholly owned,
directly or indirectly, by the Government of aContracting State or a political subdivision or
local authority thereof;- 28 -

(b)the term “principal class of shares” means theclass or classes of shares of a company which
represent a majority of the voting power of thecompany;(c)the term “recognised stock exchange” means:

(d)

(i)

any stock exchange established by a
Financial Instruments Exchange or an
approved-type financial instruments firms
association under the terms of the Financial
Instruments and Exchange Law (Law No. 25 of
1948) of Japan;(ii)

the securities markets (other than the New
Zealand Debt Market) operated by the New
Zealand Exchange Limited and any other New
Zealand securities exchange recognised under
the laws of New Zealand; and(iii)

any other stock exchange which the competentauthorities of the Contracting States agree
to recognise for the purposes of this
Article; andthe term “pension fund” means any person that:(i)is established under the law of aContracting State; and(ii)

is operated principally to administer orprovide pensions, retirement benefits orother similar remuneration or to earn income
for the benefit of other pension funds.
Article 23
LIMITATION OF RELIEF

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

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Article 24
ELIMINATION OF DOUBLE TAXATION
1.
Subject to the provisions of the laws of Japan
regarding the allowance as a credit against Japanese tax oftax payable in any country other than Japan, where aresident of Japan derives income from New Zealand which may
be taxed in New Zealand in accordance with the provisionsof this Convention, the amount of New Zealand tax payable
in respect of that income shall be allowed as a credit
against the Japanese tax imposed on that resident. The
amount of credit, however, shall not exceed that part of
the Japanese tax which is appropriate to that income.
2.
Subject to the provisions of the laws of New Zealandwhich relate to the allowance of a credit against New
Zealand tax of tax paid in a country outside New Zealand(which shall not affect the general principle of this
Article), Japanese tax paid under the laws of Japan andconsistent with this Convention, in respect of income
derived by a resident of New Zealand from sources in Japan(excluding, in the case of a dividend, tax paid in respectof the profits out of which the dividend is paid) shall beallowed as a credit against New Zealand tax payable inrespect of that income.
Article 25
NON-DISCRIMINATION
1.
Nationals of a Contracting State shall not be
subjected in the other Contracting State to any taxation or
any requirement connected therewith, which is other or moreburdensome than the taxation and connected requirements towhich nationals of that other Contracting State in the same
circumstances, in particular with respect to residence, areor may be subjected. The provisions of this paragraphshall, notwithstanding the provisions of Article 1, also
apply to persons who are not residents of one or both of
the Contracting States.
2.
The taxation on a permanent establishment which anenterprise of a Contracting State has in the other
Contracting State shall not be less favourably levied inthat other Contracting State than the taxation levied onenterprises of that other Contracting State carrying on thesame activities in similar circumstances. The provisionsof this paragraph shall not be construed as obliging aContracting State to grant to individuals who are residentsof the other Contracting State any personal allowances,
reliefs and reductions for taxation purposes on account ofcivil status or family responsibilities which it grants to
its own residents.

- 30 -

3.
Except where the provisions of paragraph 1 of Article
9, paragraph 9 of Article 11 or paragraph 6 of Article 12
apply, interest, royalties and other disbursements paid byan enterprise of a Contracting State to a resident of theother Contracting State shall, for the purposes ofdetermining the taxable profits of such enterprise, be
deductible under the same conditions as if they had been
paid to a resident of the first-mentioned Contracting
State.
4.
Enterprises of a Contracting State, the capital ofwhich is wholly or partly owned or controlled, directly or
indirectly, by one or more residents of the other
Contracting State, shall not be subjected in the firstmentioned Contracting State to any taxation or any
requirement connected therewith which is other or moreburdensome than the taxation and connected requirements towhich other similar enterprises of the first-mentioned
Contracting State in similar circumstances are or may besubjected.
5.
The provisions of this Article shall, notwithstanding
the provisions of Article 2, apply to taxes of every kindand description imposed by a Contracting State or apolitical subdivision or local authority thereof.
Article 26
MUTUAL AGREEMENT PROCEDURE
1.
Where a person considers that the actions of one orboth of the Contracting States result or will result forthat person in taxation not in accordance with theprovisions of this Convention, that person may,irrespective of the remedies provided by the domestic lawof those Contracting States, present a case to thecompetent authority of the Contracting State of which theperson is a resident or, if that person’s case comes underparagraph 1 of Article 25, to that of the Contracting Stateof which that person is a national. The case must bepresented within three years from the first notification of
the action resulting in taxation not in accordance with theprovisions of the Convention.
2.
The competent authority shall endeavour, if theobjection appears to it to be justified and if it is notitself able to arrive at a satisfactory solution, toresolve the case by mutual agreement with the competentauthority of the other Contracting State, with a view tothe avoidance of taxation which is not in accordance withthe provisions of this Convention. Any agreement reachedshall be implemented notwithstanding any time limits in thedomestic law of the Contracting States.

- 31 -

3.
The competent authorities of the Contracting Statesshall endeavour to resolve by mutual agreement any
difficulties or doubts arising as to the interpretation orapplication of this Convention. They may also consult
together for the elimination of double taxation in cases
not provided for in the Convention.
4.
The competent authorities of the Contracting States
may communicate with each other directly, including througha joint commission consisting of themselves or theirrepresentatives, for the purpose of reaching an agreementin the sense of the preceding paragraphs of this Article.
5.

Where,(a)under paragraph 1, a person has presented a caseto the competent authority of a Contracting Stateon the basis that the actions of one or both of
the Contracting States have resulted for that
person in taxation not in accordance with theprovisions of this Convention, and(b)the competent authorities are unable to reach an
agreement to resolve that case pursuant toparagraph 2 within two years from thepresentation of the case to the competentauthority of the other Contracting State,

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

- 32 -

Article 27
EXCHANGE OF INFORMATION
1.
The competent authorities of the Contracting Statesshall exchange such information as is foreseeably relevant
for carrying out the provisions of this Convention or to
the administration or enforcement of the domestic laws
concerning taxes of every kind and description imposed onbehalf of the Contracting States, or of their politicalsubdivisions or local authorities, insofar as the taxation
thereunder is not contrary to the Convention. The exchange
of information is not restricted by Articles 1 and 2.
2.
Any information received under paragraph 1 by aContracting State shall be treated as secret in the samemanner as information obtained under the domestic laws ofthat Contracting State and shall be disclosed only topersons or authorities (including courts and administrative
bodies) concerned with the assessment or collection of, theenforcement or prosecution in respect of, the determinationof appeals in relation to the taxes referred to inparagraph 1, or the oversight of the above. Such persons
or authorities shall use the information only for such
purposes. They may disclose the information in public
court proceedings or in judicial decisions.
3.
In no case shall the provisions of paragraphs 1 and 2
be construed so as to impose on a Contracting State theobligation:(a)

to carry out administrative measures at variancewith the laws and administrative practice of thator of the other Contracting State;(b)to supply information which is not obtainable
under the laws or in the normal course of theadministration of that or of the other
Contracting State;(c)to supply information which would disclose any
trade, business, industrial, commercial or
professional secret or trade process, orinformation, the disclosure of which would becontrary to public policy.

- 33 -

4.
If information is requested by a Contracting State inaccordance with this Article, the other Contracting State
shall use its information gathering measures to obtain therequested information, even though that other Contracting
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 aContracting State to decline to supply information solely
because it has no domestic interest in such information.
5.
In no case shall the provisions of paragraph 3 beconstrued to permit a Contracting State to decline tosupply information solely because the information is heldby a bank, other financial institution, nominee or person
acting in an agency or a fiduciary capacity or because it
relates to ownership interests in a person.
Article 28
ASSISTANCE IN THE COLLECTION OF TAXES
1.
The Contracting States shall lend assistance to eachother in the collection of revenue claims. This assistanceis not restricted by Articles 1 and 2.
2.
The term “revenue claim” as used in this Article means
an amount owed in respect of the taxes covered by Article 2
and in addition, the following taxes imposed by theContracting States, insofar as the taxation thereunder is
not contrary to this Convention or any other instrument towhich the Contracting States are parties, as well asinterest, administrative penalties and costs of collection
or conservancy related to such amount:
(a)

(b)

in the case of Japan:(i)the consumption tax;(ii)

the inheritance tax; and(iii)

the gift tax;

in the case of New Zealand:
the goods and services tax.

- 34 -

3.
When a revenue claim of a Contracting State isenforceable under the laws of that Contracting State and is
owed by a person who, at that time, cannot, under the lawsof that Contracting State, prevent its collection, thatrevenue claim shall, at the request of the competentauthority of that Contracting State, be accepted for
purposes of collection by the competent authority of theother Contracting State. That revenue claim shall becollected by that other Contracting State in accordancewith the provisions of its laws applicable to theenforcement and collection of its own taxes as if therevenue claim were a revenue claim of that other
Contracting State that met the conditions allowing that
other Contracting State to make a request under thisparagraph.
4.
When a revenue claim of a Contracting State is a claim
in respect of which that Contracting State may, under its
law, take measures of conservancy with a view to ensure its
collection, that revenue claim shall, at the request of thecompetent authority of that Contracting State, be acceptedfor purposes of taking measures of conservancy by thecompetent authority of the other Contracting State. Thatother Contracting State shall take measures of conservancy
in respect of that revenue claim in accordance with theprovisions of its laws as if the revenue claim were arevenue claim of that other Contracting State even if, at
the time when such measures are applied, the revenue claim
is not enforceable in the first-mentioned Contracting Stateor is owed by a person who has a right to prevent its
collection.
5.
Notwithstanding the provisions of paragraphs 3 and 4,
a revenue claim accepted by a Contracting State forpurposes of paragraph 3 or 4 shall not, in that Contracting
State, be subject to the time limits or accorded any
priority applicable to a revenue claim under the laws ofthat Contracting State by reason of its nature as such. In
addition, a revenue claim accepted by a Contracting Statefor the purposes of paragraph 3 or 4 shall not, in thatContracting State, have any priority applicable to thatrevenue claim under the laws of the other Contracting
State.

- 35 -

6.
Notwithstanding the provisions of paragraph 5, acts
carried out by a Contracting State in the collection of arevenue claim accepted by that Contracting State forpurposes of paragraph 3 or 4, which, if they were carriedout by the other Contracting State, would have the effectof suspending or interrupting the time limits applicable to
the revenue claim according to the laws of that other
Contracting State, shall have such effect under the laws ofthat other Contracting State. The first-mentioned
Contracting State shall inform the other Contracting State
about such acts.
7.
Proceedings with respect to the existence, validity or
the amount of a revenue claim of a Contracting State shallnot be brought before the courts or administrative bodiesof the other Contracting State.
8.
Where, at any time after a request has been made by aContracting State under paragraph 3 or 4 and before theother Contracting State has collected and remitted therelevant revenue claim to the first-mentioned Contracting
State, the relevant revenue claim ceases to be(a)in the case of a request under paragraph 3, arevenue claim of the first-mentioned Contracting
State that is enforceable under the laws of thatContracting State and is owed by a person who, atthat time, cannot, under the laws of thatContracting State, prevent its collection, or(b)

in the case of a request under paragraph 4, arevenue claim of the first-mentioned Contracting
State in respect of which that Contracting State
may, under its laws, take measures of conservancy
with a view to ensure its collection

the competent authority of the first-mentioned Contracting
State shall promptly notify the competent authority of theother Contracting State of that fact and, at the option of
the other Contracting State, the first-mentioned
Contracting State shall either suspend or withdraw its
request.
9.
In no case shall the provisions of this Article beconstrued so as to impose on a Contracting State theobligation:(a)

to carry out administrative measures at variancewith the laws and administrative practice of thator of the other Contracting State;- 36 -

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

to provide assistance if the other Contracting
State has not pursued all reasonable measures ofcollection or conservancy, as the case may be,available under its laws or administrative
practice;(d)to provide assistance in those cases where theadministrative burden for that Contracting Stateis clearly disproportionate to the benefit to be
derived by the other Contracting State.

10. Before assistance is lent under the provisions of this
Article, the competent authorities of both Contracting
States shall agree upon the mode of application of this
Article, including an agreement to ensure comparable levelsof assistance to each of the Contracting States. In
particular, the competent authorities of both Contracting
States shall agree on a limit to the number of applications
for assistance that a Contracting State may make in aparticular year, as well as a minimum monetary thresholdfor a revenue claim for which assistance is sought, andprocedural rules related to the remittance of amounts
collected pursuant to the provisions of this Article.
Article 29
MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS
Nothing in this Convention 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 30
HEADINGS
The headings of the Articles of this Convention are
inserted for convenience of reference only and shall notaffect the interpretation of the Convention.
Article 31
ENTRY INTO FORCE
1.
This Convention shall be approved in accordance withthe legal procedures of each of the Contracting States andshall enter into force on the thirtieth day after the dateof exchange of diplomatic notes indicating such approval.

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2.

This Convention shall be applicable:
(a)

(b)

in the case of Japan:(i)with respect to taxes on income withheld atsource, for amounts taxable on or after 1
January in the calendar year next followingthat in which the Convention enters into
force;(ii)

with respect to taxes on income which are
not withheld at source, as regards income
for any taxable year beginning on or after 1
January in the calendar year next followingthat in which the Convention enters into
force; and(iii)

with respect to other taxes, as regards
taxes for any taxable year beginning on orafter 1 January in the calendar year next
following that in which the Convention
enters into force; andin the case of New Zealand:(i)with respect to taxes on income withheld atsource, for amounts paid or credited on orafter 1 January in the calendar year next
following that in which the Convention
enters into force;(ii)

with respect to taxes on income which are
not withheld at source, for any income year
beginning on or after 1 April next following
the date on which the Convention enters into
force; and(iii)

with respect to other taxes, as regards
taxes for any taxable period beginning on orafter 1 January in the calendar year next
following that in which the Convention
enters into force.

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3.
The Convention between Japan and New Zealand for the
Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on Income signed at
Wellington on 30 January, 1963, as amended by the Protocol
signed at Wellington on 22 March, 1967 (hereinafter in this
Article referred to as “the prior Convention”) shall cease
to be applicable from the date upon which this Convention
applies in respect of the taxes to which the Convention
applies in accordance with the provisions of paragraph 2 ofthis Article.
4.
The prior Convention shall terminate on the last dateon which it applies in accordance with the provisions of
the preceding paragraphs of this Article.
Article 32
TERMINATIONThis Convention shall remain in force until terminatedby a Contracting State. Either Contracting State may
terminate the Convention, through diplomatic channels, bygiving notice of termination at least six months before theend of any calendar year beginning after the expiry of five
years from the date of entry into force of the Convention.
In such event, the Convention shall cease to have effect:
(a)

(b)

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

with respect to taxes on income which are
not withheld at source, as regards income
for any taxable year beginning on or after 1
January in the calendar year next followingthat in which the notice is given; and(iii)

with respect to other taxes, as regards
taxes for any taxable year beginning on orafter 1 January in the calendar year next
following that in which the notice is given;andin the case of New Zealand:(i)with respect to taxes on income withheld atsource, for amounts paid or credited on orafter 1 January in the calendar year next
following that in which the notice is given;- 39 -

(ii)with respect to taxes on income which are
not withheld at source, for any income year
beginning on or after 1 April in thecalendar year next following that in which
the notice of termination is given; and(iii)

with respect to other taxes, as regards
taxes for any taxable period beginning on orafter 1 January in the calendar year next
following that in which the notice is given.

IN WITNESS WHEREOF the undersigned, being duly
authorised thereto by their respective Governments, havesigned this Convention.
DONE in duplicate at Tokyo this tenth day of December,
2012, in the Japanese and English languages, both texts
being equally authentic.
FOR JAPAN

FOR NEW ZEALAND
Mark Sinclair

榛葉賀津也- 40 -

Protocol
At the signing of the Convention between Japan and New
Zealand for the Avoidance of Double Taxation and thePrevention of Fiscal Evasion with respect to Taxes on
Income (hereinafter referred to as “the Convention”), Japan
and New Zealand have agreed upon the following provisions,which shall form an integral part of the Convention:1.

It is understood that:(a)

Except to the extent provided in subparagraph(b), the Convention shall not affect the taxation
by a Contracting State of its residents (asdetermined under Article 4 of the Convention).

(b)

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

2.
With reference to paragraphs 1 and 2 of Article 2 of
the Convention:
The term “Japanese tax” or “New Zealand tax” shall notinclude any amount which represents a penalty or interest
imposed under the laws of Japan or New Zealand,
respectively, relating to the taxes to which the Convention
applies.
3.
With reference to paragraph 3 of Article 4 of theConvention:
It is understood that the term “any other relevant
factors” includes:(a)where the senior day-to-day management is carried
on;

(b)

which Contracting State’s law governs the legal
status;(c)where the accounting records are held; and(d)where business is carried on.

4.
With reference to paragraph 4 of Article 5 of theConvention:- 41 -

(a)It is understood that an enterprise of aContracting State shall not be considered tooperate equipment in the other Contracting State
where the enterprise leases equipment under alease contract that is solely for the provisionof equipment, including a bareboat lease
contract.

(b)

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

(c)

It is understood that the term “substantial
equipment” may include oil or drilling rigs,
platforms and other structures used in the
petroleum or mining industry.

5.
With reference to subparagraph (a) of paragraph 6 of
Article 7 of the Convention:
It is understood that in the case of Japan the term "atrust which is treated as a company for tax purposes" meansa trust, the trustee of which is subject to tax in respectof profits derived from business carried on by the use oftrust estate.
6.
With reference to Articles 10, 11 and 12 of theConvention:
It is understood that in determining, for the purposesof those Articles, whether dividends, interest or royalties
are beneficially owned by a resident of New Zealand:(a)dividends, interest or royalties arising in Japanin respect of which a trustee who is a residentof New Zealand is subject to tax in New Zealand;or(b)dividends arising in Japan in respect of which atrustee who is a resident of New Zealand would be
subject to tax in New Zealand but for an
application of an exemption that applies
generally to those dividends under the law of New
Zealand,shall be treated as being beneficially owned by thattrustee.
7.
With reference to paragraph 3 of Article 10 of theConvention:- 42 -

If, in any future tax treaty with any other state, New
Zealand should provide more favourable treatment ofdividends with respect to the relevant conditions, New
Zealand shall without undue delay inform Japan and shallenter into negotiations with Japan with a view to providing
the same treatment.
8.
With reference to paragraph 6 of Article 10 of theConvention:
It is understood that the term “dividends” includes,in the case of New Zealand, income in relation to profitrelated debentures, substituting debentures and stapled
debt securities as defined in sections FA 2 and FA 2B ofthe Income Tax Act 2007 or any substantially similar
provision which is enacted and has effect after the date ofsignature of the Convention.
9.
With reference to paragraph 3 and 4 of Article 11 of
the Convention:
It is understood that the New Zealand Export Credit
Office is a part of the Government of New Zealand.
10. With reference to paragraph 5 of Article 11 of theConvention:
It is understood that the term “arrangement involving
back-to-back loans” would cover, inter alia, any kind of
arrangement structured in such a way that a financial
institution which is a resident of a Contracting State
receives interest arising in the other Contracting Stateand the financial institution pays an equivalent interest
to another person who is a resident of the first-mentioned
Contracting State and, if it received the interest directlyfrom the other Contracting State, would not be entitled tothe exemption from tax with respect to that interest inthat other Contracting State.
11.

With reference to Article 11 of the Convention:

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

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12. With reference to Articles 11, 12 and 14 of theConvention:
The reference to the term “borne by” is also
applicable to interest, royalties or remuneration that isdeductible in determining the profits attributable to apermanent establishment.
13. With reference to subparagraph (d) of paragraph 3 ofArticle 12 of the Convention:
It is understood that the term “forbearance in respectof the use or supply of any property or right” applies tocases where the holder of any property or right receives apayment as consideration for not making such property orright available to another person.
14.

With reference to Article 13 of the Convention:

It is understood that paragraph 1 of Article 13 of theConvention shall apply to income, profits or gains derived
by a resident of a Contracting State from the alienation of
the interests in a partnership or trust to the extent thatthe income, profits or gains is treated for the purposes of
the taxation laws of the other Contracting State as theincome, profits or gains derived from the alienation of
immovable property referred to in Article 6 of theConvention situated in that other Contracting State.
15.

With reference to Article 25 of the Convention:

It is confirmed that the provisions of Article 25 of
the Convention shall not affect the provisions of thetaxation laws of New Zealand concerning:(a)Subpart FE of the Income Tax Act 2007 which deals
with thin capitalisation;(b)

Section CW 10 of the Income Tax Act 2007 which
deals with an inter-corporate dividend exemption
for wholly-owned groups;(c)Subpart FM of the Income Tax Act 2007 which deals
with consolidated groups;(d)Section EB 5 of the Income Tax Act 2007 which
deals with transfers of trading stock within awholly-owned group;(e)Subpart IC of the Income Tax Act 2007 which deals
with loss offsets between group companies;- 44 -

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

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

provided that any such provision does not allow fordifferent treatment of residents of Japan as compared withthe treatment of residents of any third state.
16. With reference to paragraph 5 of Article 26 of theConvention:(a)

The competent authorities shall by mutual
agreement establish a procedure in order toensure that an arbitration decision will be
implemented within two years from a request forarbitration as referred to in paragraph 5 of
Article 26 of the Convention unless actions orinaction of a person directly affected by thecase presented pursuant to that paragraph hinder
the resolution of the case or unless thecompetent authorities and that person agree
otherwise.

(b)

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

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

(ii)

Each competent authority shall appoint one
arbitrator. The two arbitrators appointed
by the competent authorities shall appoint
the third arbitrator who serves as the chairof the arbitration panel in accordance withthe procedures agreed by the competentauthorities.

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(iii)All arbitrators shall not be employees of
the tax authorities of the Contracting
States, nor have had dealt with the casepresented pursuant to paragraph 1 of Article
26 of the Convention in any capacity.
Unless otherwise agreed by the competentauthorities of the Contracting States, thethird arbitrator shall not be a national ofeither Contracting State, nor have had thearbitrator’s usual place of residence ineither Contracting State, nor have been
employed by either Contracting State.

(iv)

The competent authorities shall ensure that
all arbitrators and their staff agree, instatements sent to each competent authority,
prior to their acting in an arbitration
proceeding, to abide by and be subject tothe same confidentiality and non-disclosure
obligations described in paragraph 2 ofArticle 27 of the Convention and in theapplicable domestic laws of the Contracting
States.

(v)

Each competent authority shall bear the costof its appointed arbitrator and its own
expenses. The cost of the chair of anarbitration panel and other expenses
associated with the conduct of theproceedings shall be borne by the competentauthorities in equal shares.

(c)

The competent authorities shall provide theinformation necessary for the arbitration
decision to all arbitrators and their staff
without undue delay.

(d)An arbitration decision shall be treated asfollows:(i)

An arbitration decision has no formal
precedential value.

- 46 -(ii)(e)

An arbitration decision shall be final,
unless that decision is found to be
unenforceable by the courts of one of theContracting States due to a violation ofparagraph 5 of Article 26 of the Convention,of this paragraph or of any procedural rule
determined in accordance with subparagraph(a) of this paragraph that may reasonably
have affected the decision. If the decision
is found to be unenforceable due to theviolation, the decision shall be considered
not to have been made.

Where, at any time after a request forarbitration has been made and before thearbitration panel has delivered a decision to thecompetent authorities and the person who made therequest for arbitration, the competentauthorities have solved all the unresolved issues
submitted to the arbitration, the case shall beconsidered as resolved pursuant to paragraph 2 ofArticle 26 of the Convention and no arbitration
decision shall be provided.

17. With reference to paragraph 5 of Article 27 of theConvention:
It is understood that a Contracting State may decline
to supply information relating to confidential
communications between attorneys, solicitors or otheradmitted legal representatives in their role as such andtheir clients to the extent that the communications areprotected from disclosure under the domestic law of thatContracting State.
18.

With reference to Article 28 of the Convention:(a)

It is understood that in the case of New Zealandthe collection of a revenue claim is subject toPart 10A of the Tax Administration Act 1994 or
any legislation which replaces those provisions
after the date of signature of the Convention.

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(b)In no case shall the provisions of Article 28 of
the Convention be construed so as to allow aContracting State to request assistance from theother Contracting State in the collection of arevenue claim with respect to which the firstmentioned Contracting State would not be able toprovide such assistance under the laws or in thenormal course of administrative practices of thefirst-mentioned Contracting State if the request
for such assistance were made to the firstmentioned Contracting State.

IN WITNESS WHEREOF the undersigned, being duly
authorised thereto by their respective Governments, havesigned this Protocol.
DONE in duplicate at Tokyo this tenth day of December,
2012, in the Japanese and English languages, both texts
being equally authentic.
FOR JAPAN

FOR NEW ZEALAND
Mark Sinclair

榛葉賀津也- 48 -