The Minister for Financial Services & Regulation, Joe Hockey, today said passage of a law affecting interest withholding tax exemptions, offshore banking units, foreign investment fund measures and thin capitalisation rules was a huge boost to Australia's plans to be a centre for global financial services.
"This is fantastic news for Australia. The measures contained in the bill will be a huge step forward in the Government's plans to make Australia a centre for global financial services," the Minister said.
These changes are contained in Taxation Laws Amendment Act (No 2) 1999 which passed through the Senate tonight.
"Widening the exemption from interest withholding tax on Australian-sourced interest paid to offshore investors will facilitate greater depth and liquidity in the already buoyant and dynamic Australian corporate debt market.
"These reforms are expected to make it a lot easier for corporate issuers to raise funds in Australia and in Australian dollars allowing them, like millions of Australians, to benefit in a real and tangible way from the excellent job the Government has done with the economy.
"The activities that can be undertaken by OBUs has been extended, and other improvements to the regime introduced. Now certain funds managers, life insurance companies and providers of custodial services can set up OBUs. OBUs benefit from a concessional tax rate, effectively of 10 per cent."
The Act also relaxes Foreign Investment Fund (FIF) rules to exempt certain FIF investments located in the United States.
"The exemption is intended to encourage Australian investment funds to be more globally competitive by exposing them to competition from US funds, offering Australian consumers a greater range of choice for their investment dollar.
"As part of our financial centre plans, the Government recognises the need for an attractive taxation regime in this highly competitive global environment.
"But where we offer tax concessions and investment incentives, it is with a view to building sustained and meaningful investment relationships without tilting the playing field against the strong, innovative and cost-effective based existing Australian players."
Taxation Laws Amendment Act (No 2) 1999 will be available from www.treasury.gov.au