- The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved the ratification and entry into force of the third Protocol to the Convention between India and New Zealand for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income (Convention). The Protocol was signed on 26th October, 2016.
- The Protocol will stimulate the flow of exchange of information between India and New Zealand for tax purposes which will help curb tax evasion and tax avoidance. It will also enable assistance in collection of tax revenue claims between both countries.
- Article 26 on ‘Exchange of Information’ of the existing Convention has been replaced with a new Article in the Protocol which is in line with the international standard for exchange of information.
- A new Article on ‘Assistance on Collection of Taxes’ has been added in the Protocol.
- The Protocol shall enter into force on the date of notification of completion of the procedures required by the respective laws of the two countries for entry into force of the Protocol.
- The Central Government is authorized under section 90 of the Income Tax Act, 1961 to enter into an Agreement with a foreign country or specified territory for exchange of information and recovery of income tax for the prevention of evasion or avoidance of income-tax chargeable under the Income-tax Act, 1961. The Convention came into force on 3rd December, 1986. The Convention was amended in 1997 through a First Protocol and in 2000 through a Second Protocol. Subsequently, India proposed to further amend the Convention through a Third Protocol to update the Exchange of Information Article as per the international standard and to insert an Article on Assistance in the Collection of taxes. Accordingly, negotiations were entered into with New Zealand and agreement was reached on both the Articles of the Third Protocol.