Aug. 6 – Vietnamese President Truong Tan Sang and New Zealand Governor-General Rt Hon Sir Jerry Mateparae met in Hanoi yesterday to sign a new double tax agreement (DTA) that seeks to further boost economic relations and clarify tax-related issues between the two countries.
The development and signing of this DTA comes quickly on the heels of the New Zealand government’s “NZ Inc.” ASEAN strategy that it launched last month. This strategy aims to improve New Zealand’s trade and investment presence throughout Southeast Asia.
The DTA between New Zealand and Vietnam aims to reduce tax impediments to trade and investment between the countries by preventing businesses that operate in each respective country from being taxed twice (i.e., once in each country). Not only will the DTA clarify the two countries’ tax rules, but it will also play an important role in the detection and prevention of tax evasion.
“Today’s signing of a double tax agreement between our two countries recognizes the increasing importance of New Zealand’s relationship with Vietnam and the National-led Government’s commitment to lifting its engagement with Southeast Asia,” noted New Zealand’s Revenue Minister Todd McClay. “Education, dairy, timber and food and beverage are already significant trade areas for us. [However,] Vietnam also offers a lot of growth potential in other areas such as aviation, tourism, clean technologies, environmental management and agri-business.”
With the addition of the new agreement with Vietnam, New Zealand now has 39 DTAs with key trading and investment partners throughout the world.
Vietnam and New Zealand have taken great strides in their trade ties over recent years, with two-way trade increasing at an annual rate. Overall trade in 2011 stood at US$525 million, and expanded to US$569 million in 2012. In the first half of 2013 alone, trade figures have already reached more than half of last year’s total, raising 18 percent year on year to US$335 million.
New Zealand currently has a total of 18 ongoing projects in Vietnam worth a total investment value of over US$76 million, making it the 40th biggest investor in the country.
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.
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An Introduction to Tax Treaties Throughout Asia
In this issue of Asia Briefing Magazine, we take a look at the various types of trade and tax treaties that exist between Asian nations. These include bilateral investment treaties (BITs) and also the meatier double tax treaties (DTAs) and free trade agreements (FTAs) that directly affect businesses operating in Asia.
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