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Approved Changes (2)

New Zealand

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New Zealand Enacts Bright-Line Test for Residential Property

On 16 November 2015, the Taxation (Bright-line Test for Residential Land) Bill received Royal assent following its recent parliamentary approval. The Bill, which was introduced in August 2015, implements a new test concerning the sale and taxation of residential property in New Zealand by both residents and non-residents alike.

Under the bright-line test, gains on the sale of residential land are subject to tax if purchased and sold within two years. Residential land is defined as:

  • Land that has a dwelling on it;
  • Land for which the owner has an arrangement to erect a dwelling; or
  • Land that because of its area and nature is capable of having a dwelling erected on it.

The test does not apply to land used predominately as business premises or farmland. In addition, three specific exemptions are provided, including:

  • A disposal of property that is the main home of the transferor (in certain circumstances);
  • A disposal of inherited property; and
  • A transfer under a relationship property agreement.

In connection with the new bright-line test, New Zealand is also planning the implementation of a Residential Land Withholding Tax (RLWT) that will act as the collection mechanism for non-resident sellers of New Zealand property (previous coverage). The bright-line test applies for property purchased on or after 1 October 2015, while the RLWT is to apply for property transactions settled on or after 1 July 2016.


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G20 Leaders Endorse Final BEPS Package

Following the 15-16 November G20 Leaders Summit in Anatalya, Turkey, The G20 Leaders issued a communiqué in which they endorse the final BEPS package and urge the timely implementation of its measures. The final BEPS package, including reports on all 15 Action Items, was released by the OECD on 5 October 2015 (previous coverage). The communiqué states:

"To reach a globally fair and modern international tax system, we endorse the package of measures developed under the ambitious G20/OECD Base Erosion and Profit Shifting (BEPS) project. Widespread and consistent implementation will be critical in the effectiveness of the project, in particular as regards the exchange of information on cross-border tax rulings. We, therefore, strongly urge the timely implementation of the project and encourage all countries and jurisdictions, including developing ones, to participate. To monitor the implementation of the BEPS project globally, we call on the OECD to develop an inclusive framework by early 2016 with the involvement of interested non-G20 countries and jurisdictions which commit to implement the BEPS project, including developing economies, on an equal footing. We welcome the efforts by the IMF, OECD, UN and WBG to provide appropriate technical assistance to interested developing economies in tackling the domestic resource mobilization challenges they face, including from BEPS. We acknowledge that interested non-G20 developing countries’ timing of implementation may differ from other countries and expect the OECD and other international organizations to ensure that their circumstances are appropriately addressed in the framework. We are progressing towards enhancing the transparency of our tax systems and we reaffirm our previous commitments to information exchange on-request as well as to automatic exchange of information by 2017 or end-2018. We invite other jurisdictions to join us. We support the efforts for strengthening developing economies’ engagement in the international tax agenda."

Click the following link for the full text of the G20 Leaders’ Communiqué.

Treaty Changes (5)

Armenia-United States

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Tax Treaty between Armenia and the U.S. to be Negotiated

Officials from Armenia and the United States are to begin negotiations for an income tax treaty on 19 November 2015. Any resulting treaty will be the first of its kind directly between the two countries, and must be finalized, signed and ratified before entering into force.

The United States currently applies the 1973 income tax treaty with the former Soviet Union in respect of Armenia, although Armenia does not generally apply the provisions of that treaty in respect of the United States.


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TIEA between Austria and Mauritius to Enter into Force

The tax information exchange agreement between Austria and Mauritius entered into force on 8 October 2015. The agreement, signed 10 March 2015, is the first of its kind between the two countries. It is in line with the OECD standard for information exchange and applies in respect of taxes for any fiscal year beginning after 31 December 2015.


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TIEA between Belgium and Montserrat Enters into Force

According to a recent update from the Belgian government, the pending tax information exchange agreement between Belgium and Montserrat enters into force on 18 November 2015. The agreement, signed 16 February 2010, is the first of its kind between the two countries. It is in line with the OECD standard for information exchange and generally applies from the date of its entry into force.


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Brazil Approves Protocol to Tax Treaty with India

On 6 November 2015, the Brazilian government approved for ratification the pending protocol to the 1988 income tax treaty with India. The protocol, signed 15 October 2013, replaces Article 26 (Exchange of Information) of the treaty, bringing it in line with the OECD standard for information exchange. It is the first to amend the treaty, and will enter into force and apply 30 days after the ratification instruments are exchanged.

United Kingdom-Nepal-Romania-Trin & Tobago-Uzbekistan-Colombia-Fiji-Ghana-Guernsey-India-Isle Of Man-Israel-Jersey-Kazakhstan-Kyrgyzstan-Lesotho-Malawi-Portugal-Russia-Thailand-Turkmenistan-Untd A Emirates-United States-Uruguay

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UK Announces Tax Treaty and Protocol Negotiation Plans

On 13 November 2015, the UK HMRC published a policy paper outlining its tax treaty and protocol negotiation plans for the coming year. In particular, HMRC will negotiate new treaties with:

  • Nepal, which will be the first of its kind between the two countries;
  • Romania, which will replace the 1975 income and capital tax treaty
  • Trinidad and Tobago, which will replace the 1982 income tax treaty; and
  • Uzbekistan, which will replace the 1993 income and capital tax treaty.

HMRC is also planning to work on tax treaties and protocols to existing treaties with:

  • Colombia;
  • Fiji;
  • Ghana;
  • Guernsey;
  • India;
  • Isle of Man;
  • Israel;
  • Jersey;
  • Kazakhstan;
  • Kyrgyzstan;
  • Lesotho;
  • Malawi;
  • Portugal;
  • Russia;
  • Thailand;
  • Turkmenistan;
  • United Arab Emirates;
  • United States; and
  • Uruguay.

Any resulting treaties or protocol must be finalized, signed and ratified before entering into force.


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