The new agreement will lower withholding taxes on dividends, interest and royalties between the two countries from Aug. "For businesses, tax agreements provide greater certainty and reduce the likelihood of being taxed twice on cross-border transactions, while investors will generally be better off as a result of lower withholding taxes on their cross-border investment returns," McClay said in a statement.
Under the agreement, the withholding tax rate on dividends would fall from 15 percent to a maximum of 5 percent for an investor who holds a minimum of 10 percent of the shares in the dividend-paying company.
The withholding rate on royalties would fall from 15 percent to 10 percent generally, with a further reduced rate of 5 percent for royalties on copyright, computer software, and other specified items.
The withholding rate on interest payments would be lowered from 15 percent to a maximum of 10 percent.
"Canada is an important investment and trading partner for New Zealand. The new tax agreement updates and modernizes the 1980 agreement between our two countries and is testament to the strong relationship we continue to share," said McClay.