Thursday, 16 August 2007
International Tax Agreements Amendment Bill (No. 2) 2007
That being said, in its review of international tax arrangements this government undertook to implement a package of reforms that will improve the competitiveness of Australian companies with offshore operations and maintain Australia’s status as an attractive place for business and investment. This bill will give the force of law to the renegotiated tax treaty with Finland. Once again this demonstrates the government’s commitment to these outcomes by progressively modernising Australia’s tax treaties. This bill will insert the text of the agreement between Australia and Finland into the International Tax Agreements Act 1953. The agreement between Australia and Finland was signed on 20 November 2006 and will replace the existing tax treaty with Finland. Details of the new treaty were announced and copies were made publicly available following signature. The agreement will assist trade and investment flows between Australia and Finland, strengthening our economic relations with Finland. It will provide a positive economic environment for Australia and contribute to a larger and faster-growing Australian economy.
The agreement will broadly update the taxation arrangements between Australia and Finland. It will substantially reduce withholding taxes on certain dividend, interest and royalty payments in line with those provided in our tax treaty arrangements with the United Kingdom and the United States, and more recently with France and Norway. This will provide long-term benefits for business, reducing the cost for Australian based business to obtain intellectual property, equity and finance for expansion. The new agreement achieves a balance of outcomes that will provide Australia with a competitive tax framework for international trade and investment, while ensuring the Australian revenue base is sustainable and suitably protected. The agreement includes rules to prevent tax discrimination against nationals and Australian businesses operating in Finland and vice versa.
The agreement serves as another step in facilitating a competitive and modern tax treaty network for companies located in Australia. The agreement will also satisfy Australia’s most favoured nation obligations under the existing treaty with Finland. The agreement will also facilitate improved integrity aspects of administering and collecting tax from those with tax obligations in either/or both countries. The agreement reflects the government’s decision to incorporate enhanced information exchange provisions which meet modern OECD standards and to provide for reciprocal assistance in collection in future tax treaties where appropriate. The government believes that the conclusion of the agreement will strengthen the integrity of Australia’s tax treaty network through bilateral cooperation between countries to help ensure taxpayers pay their fair share of tax. The agreement will enter into force after the completion of the necessary processes in both countries and will have effect in accordance with its terms. I note that the agreement has been considered by the Joint Standing Committee on Treaties, which has recommended that binding treaty action be taken. The enactment of this bill, and the satisfaction of the other procedures relating to proposed treaty actions, will complete the processes followed in Australia to bring the treaty into force. On that basis, I commend this bill to the House.
Question agreed to.
Bill read a second time.
Ordered that the bill be reported to the House without amendment.