New Zealand: AIL on interest from certain corporate bonds reduced to 0%
7 May 2012
the Approved Issuer Levy (AIL) on interest payments paid to non-resident beneficial owners on certain “qualified” corporate bonds has, according to the recent Taxation Act 2012, been reduced from 2% to 0%.
The corporate bonds affected by this change must meet all of the following requirements at the same time in order to be considered as “qualified”:
- The security is denominated in New Zealand dollars; and
- The issue of the security:
- was an offer to the public for the purposes of the Securities Act 1978; and
- was not a private placement; and
- The security is not an asset-backed security; and
- The activities of the registrar and the paying agent for the security are carried on through a fixed establishment in New Zealand; and
- The security:
- is listed on an exchange registered under the Securities Markets Act 1988; or
- is one of a number of securities:
- that are traded in a market bringing together buyers and sellers of such securities; and
- that are widely held by 100 or more persons not reasonably expected to be associated with the issuer or another member of the group; and
- of whose class of securities no person or group of associated persons holds more than 10% by value.
Impact on customers
Eligible non-resident beneficial owners, holding New Zealand corporate bonds and having elected for the AIL to apply, may benefit from the following rates upon submission of the required documentation:
- 0% levy if the registered security is a "qualified" corporate bond covered by the AIL scheme and meeting certain conditions; or
- 2% levy if the registered security is an "ordinary" corporate bond covered by the AIL scheme; or
- Withholding tax in accordance with a Double Taxation Treaty between their country of residence and New Zealand if the registered security is an "ordinary" Corporate bond not covered by the AIL scheme.
N.B.: If the “One-time Certification for New Zealand Government Debt Securities and other New Zealand domestic Debt securities governed by the Approved Issuer Levy Regime” is not received by Clearstream before our stated deadline, the issue will be considered as a “standard debt security” and the interest payment will be subject to the standard Non-Resident Withholding Tax (NRWT) rate on debt securities not covered by the AIL scheme (currently 15%).
We have currently not been informed of any corporate issue that meets the eligibility requirements for the 0% AIL. We will continue to monitor the situation and provide more information as it becomes available.
For further information, please contact the Clearstream Banking1 Tax Help Desk on:
|Telephone:||+352-243-32835||+49-(0) 69-2 11-1 3821|
|Fax:||+352-243-632835||+49-(0) 69-2 11-61 3821|
or Clearstream Banking Customer Service or your Relationship Officer.
1. Clearstream Banking refers collectively to Clearstream Banking AG, registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in the Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500 (CBF) and Clearstream Banking, société anonyme, registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Register of Commerce and Companies under number B-9248 (CBL).
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