Negotiating Double Tax Agreements Without the OECD Model Agreement: New Zealand's Early Double Tax Agreements

Abstract

Since WW II there has been a rapid expansion in the number of bilateral double tax agreements (DTAs) concluded between countries. A feature of modern DTA negotiations has been the adoption of internationally accepted models or templates from which most DTAs are negotiated from. Although such models were in existence prior to WW II, it was not until the OECD released its Draft Model Convention in 1963 did one particular model achieve a pre-eminence in DTA negotiations which is the case today. New Zealand did not negotiate its first comprehensive DTA until 1947. In the following three decades New Zealand extended its DTA network to an additional eight countries in a rather slow and haphazard way. During this period none of its DTA negotiations were based on any internationally accepted model, even after the release of the OECD Draft Model Agreement in 1963. New Zealand did not negotiate any DTA based on a recognised international model until after it joined the OECD in 1973 and adopted the 1977 version of the OECD Model Agreement. This paper reviews New Zealand’s early DTAs negotiated prior it adopting the OECD Model in 1977. An analysis reveals that New Zealand’s early DTAs did not have the degree of uniformity found today in modern DTAs based upon the OECD Model. In addition, they contained fewer articles than are found in modern DTAs today and contained some provisions which were substantially at variance with what are now international tax norms or benchmarks. The analysis in this paper of these early DTAs also provides insights as to the benefits flowing to New Zealand in the tax area since it joined the OECD and also to other countries from the adoption of internationally recognised models (including the UN Model) as a starting point in DTA negotiations.