Australia’s first tax treaty with Iceland is now in force, bringing new opportunities to trade, invest and connect with its thriving economy.
Iceland has one of the highest Gross Domestic Product per capita ratios in the world.
The tax treaty which comes into effect today facilitates easier access to the Icelandic market at a lower cost through reduced tax rates, lower compliance costs and reduced instances of double taxation.
This treaty will also support the Government’s plan to make multinationals pay their fair share of tax through added integrity measures and mechanisms.
This will facilitate greater cooperation and information sharing to detect and combat tax evasion.
Tax treaties also help reduce tax uncertainty and administrative burden for individuals looking to study, live and work overseas, thereby facilitating labour mobility.
This treaty is a welcome opportunity to deepen our cultural ties and people to people links with Iceland, a country with many shared values with Australia.
This tax treaty is the first to be fully implemented as part of the Government’s plan to enter into 12 new tax treaties.
The treaty’s tax rates will apply from 2024 to withholding rates on the relevant Australian income earned from 1 January, fringe benefits provided from 1 April and to any other Australian taxes on income earned from 1 July.
In Iceland, all aspects of the treaty will take effect from 1 January 2024.
A summary of the main features of the new treaty is available on the Treasury website.