It is perhaps interesting to note that while the existing 1986 DBA is a “covered agreement” within the meaning of the multilateral agreement on the implementation of related measures to prevent base erosion and profit shifting (MLI), China`s position on this issue in relation to New Zealand meant that many of the new LMM articles would not apply to the 1986 DBA. For example, not all changes to the institution`s articles apply (artificial prevention through commission regimes, specific exemptions and contract splitting). Although China has not yet ratified the MLI and therefore did not enter into force for the DBA in 1986. However, the new DBA not only contains the new articles on MLI that have been agreed upon, but it also contains some of these other articles. For example, Article 12 of the MLI, which concerns the artificial circumvention of settlement status by Commission agreements, was effectively included in the article on the stable establishment of the new agreement, although China reserves the right, initially, to adopt this article of LML. Overall, this section means that when a person acts on behalf of a company and normally enters into certain types of contracts or usually plays the primary role that leads to the conclusion of certain types of contracts concluded on a regular basis without substantial changes by the company, a stable establishment is created. The transparent tax formulation (Article 3 MLI) and the definition of a person closely linked to a business (Article 15 MLI) were also included in the DBA. A new double taxation agreement (DBA) between the People`s Republic of China and New Zealand was signed on 1 April 2019. This agreement, if it is in force, will replace a 1986 agreement and, therefore, will put in place modern tax legislation for cross-border economic activities. The other point is that this signed agreement will not enter into force until internal procedures in the two countries are completed and diplomatic notes are exchanged. It could take a few more months.
If this process takes place in the 2019 calendar year, the earliest date for the implementation of this agreement would be from 1 January 2020 with regard to withholding tax; for each taxable year beginning January 1, 2020 for other taxes.
