Share with your friends

Australia: Discussions of possible repeal of “offshore banking unit” regime

Australia: Possible repeal of “offshore banking unit”

Changes to Australia’s offshore banking unit regime are expected to be announced by Treasury, and there are some indications that the regime may even be repealed.


Related content

Currently, the offshore banking unit regime provides a concessional tax rate of 10% and an interest withholding tax exemption for “offshore banking” activities that generally involve “offshore persons” (for instance, non-residents, foreign branches or other offshore banking units).

In October 2018, the Organisation for Economic Cooperation and Development’s (OECD) Forum on Harmful Tax Practices (FHTP) raised concerns regarding the offshore banking unit regime’s concessional tax rate and its “ring-fenced” nature (that is, essentially, its limited access to domestic markets). Treasury has been in ongoing dialogue with the FHTP and a recommendation is with the Treasurer for approval. It appears that a likely outcome would be repeal of the offshore banking unit regime, possibly as early as the end of 2020 (after consultation). In the meantime, there are reports that the Australian Taxation Office (ATO) has been reluctant to process new offshore banking unit registrations.

Read a September 2019 report prepared by the KPMG member firm in Australia

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us


Want to do business with KPMG?


loading image Request for proposal