The Assistant Treasurer and Minister for Competition Policy and Consumer Affairs, Chris Bowen MP, today announced the signing of a Tax Information Exchange Agreement (TIEA) and an agreement for the allocation of taxing rights over certain income of individuals between Australia and the Isle of Man.
Concluding TIEAs with offshore financial centres is an important element in Australia's efforts to combat tax avoidance and evasion.
"This TIEA will provide for exchange of information (EOI), on request, for both civil and criminal tax matters, and demonstrates Australia's ongoing commitment to implementing Organisation for Economic Cooperation and Development (OECD) standards of transparency and effective EOI for tax purposes," Mr Bowen said.
"This is the fifth TIEA signed by Australia, and Australia welcomes the Isle of Man's constructive engagement in this area."
The agreement to allocate taxing rights over certain income of individuals and to establish a mutual agreement procedure in respect of transfer pricing adjustments will benefit residents of Australia and the Isle of Man by eliminating double taxation of certain income and providing a mechanism for the resolution of transfer pricing disputes. This agreement will remove some of the obstacles that inhibit economic activity between Australia and the Isle of Man.
The agreements will enter into force after both countries have advised that they have completed their domestic requirements. Legislation for this purpose will be introduced into the Australian Parliament as soon as practicable.
In addition to these agreements, Australia will remove any governmental references to the Isle of Man as a tax haven, and, following the entry into force of the TIEA, will list the Isle of Man as an 'information exchange country' in the Taxation Administration Regulations 1976. This will provide residents of the Isle of Man with access to reduced withholding tax rates on distributions of certain income they may receive from Australian managed investment trusts.
Further, as indicated in a joint declaration, Australia and the Isle of Man will seek to continue to examine what further measures could be adopted to enhance their economic and trading relationship, and ways in which bilateral cooperation can be made as effective as possible.
Copies of the agreements are available on the Treasury website.