The Australian Treasurer and Japanese Minister of Finance met today and have agreed that officials from their Departments should commence necessary preparations for formal discussions to revise our current tax treaty.
The existing tax treaty, signed in 1969, has played a crucial role in developing the vital trade and investment relationship between Australia and Japan, but should now be updated to ensure that it reflects the far more sophisticated relationship of the 21st Century. Both countries tax systems have evolved to keep pace with modern business practices, so it is time that the treaty was updated to capture this evolution.
“Japan is Australia’s largest export market, with exports of goods and services worth A$34.2 billion in 2005-06. Japan is Australia’s third-largest source of foreign investment, with direct, portfolio and other investments worth A$53.3 billion at the end of 2005. Australian investment in Japan was worth A$31.5 billion at the end of 2005,” the Treasurer, Peter Costello, said today.
“Tax treaties assist in Australia’s economic growth, as they encourage cross-border investment by relieving double taxation and increasing certainty of taxation treatment.”
The revision of this treaty will enhance Australia’s competitive and modern tax treaty network and demonstrates the Government’s commitment to ensuring treaties with key investment partner countries remain relevant to evolving business directions.
The Department of the Treasury is now seeking comments from taxpayers that have transactions with Japan that could be affected by changes to the existing treaty. The consultation process is designed to ensure that the renegotiated treaty recognises the day to day needs and experiences of all those who have dealings between Australia and Japan.
Interested parties are invited to make written submissions to the Department of the Treasury by Friday 22 December 2006. Submissions should be emailed to taxtreatiesunitconsultation@treasury.gov.au or addressed to:
Treaties Unit Manager
International Tax and Treaties Division
The Department of the Treasury
Langton Crescent
PARKES ACT 2600
Further information on Australia’s tax treaty programme and the existing Australia-Japan tax treaty can be found on the tax treaties homepage through the Treasury website at www.treasury.gov.au.