Australia: Proposed expansion of tax treaty network

Government’s ambitious plan to finalise the negotiation of 10 new or updated treaties by 2023

Government’s plan to finalise the negotiation of 10 new or updated treaties by 2023

The government announced its plans to expand Australia’s tax treaty network by updating existing tax treaties and entering into new tax treaties, with a total of 10 new and updated treaties by 2023.

What tax treaties are expected to be entered into or updated?

Specific details were provided of tax treaties with six countries to be entered into or renewed, with the remaining four treaties to be announced at a later date.

 

Jurisdiction

Existing tax treaty with Australia?

Year of existing tax treaty

 

Announced changes

   
 

Proposed first round of negotiations

   

1.

Luxembourg

No

-

2.

Iceland

No

-

3.

India

Yes

1991 (amended in 2011)

 

Proposed second round of negotiations

   

4.

Greece

No (but 1977 Airline Profits Agreement)

-

5.

Portugal

No

-

6.

Slovenia

No

-

 

What about other tax treaties with Australia?

The remaining four new tax treaties are yet to be announced by government.

The following table highlights some of Australia’s existing tax treaties that are outdated and would benefit from being renegotiated and updated to bring them into line with Australia’s more recent treaties.

 

Australia’s older treaties

   

1.

Netherlands

Yes

1976 (amended in 1986)

2

Canada

Yes

1980 (amended in 2002)

3

China

Yes

1988

4

Ireland

Yes

1983

5.

Singapore

Yes

1969 (most recently amended in 2009)

 

KPMG observation

The expansion of Australia’s tax treaty network together with updates to Australia’s existing tax treaties would enhance the attractiveness of foreign investment in Australia, and has the potential to create greater certainty for key Australian outbound investors including Australian superannuation funds and to accommodate changes in investment and business structures.

Of particular significance for the funds management industry is the proposed tax treaty with Luxembourg which, if entered into inclusive of the base erosion and profit shifting (BEPS) measures, would provide Australian outbound investors in particular with greater certainty and a more level playing field when investing into many typical European fund or business structures.

Given that many European countries currently have a tax treaty with Luxembourg, Australian investors have in the past had less certainty in undertaking European investments as compared to their European competitors.


For more information, contact a KPMG tax professional in Australia:

Denis Larkin | +61 2 9335 7171 | dlarkin@kpmg.com.au

Revell Norquay | +61 2 9335 8683 | rnorquay@kpmg.com.au

 

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained 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.