TREASURER:
Thank you ladies and gentlemen. May I welcome to this signing ceremony, the High Commissioner for the United Kingdom, Sir Alastair Goodlad. It is a great pleasure to be able to sign this new Double Taxation Treaty between Australia and the United Kingdom on behalf of the Australian Government. Our existing Treaty was first signed in 1967 and amended in 1980. In an ever-changing business environment, it is important that we update and modernise these treaties.
The signing of this new Treaty represents a major step in facilitating a modern and competitive tax regime between Australia and the United Kingdom. It will significantly develop trade and investment flows and is part of a program by the Australian Government to modernise our tax treaties as recommended by the Ralph Review of Business Taxation. The signing of this new treaty follows on with the recently signed new agreement between Australia and the United States.
The new treaty will be important to many firms because the United Kingdom is a gateway for Australian companies into Europe. And Australia is a gateway for many UK companies into Asia. The treaty which we are signing today will substantially reduce withholding tax on certain dividend interest and royalty payments in line with the outcomes we achieved in the Australian-US Treaty. It will provide long-term benefits for business and allow Australian businesses the opportunity to access finance from the United Kingdom, to lend into the United Kingdom, and will give them better opportunity to exercise royalty and intellectual property. It will provide flexibility for duel listing and it will also address capital gains tax issues. In addition, the treaty will assist in preventing fiscal evasion by removing impediments to the exchange of information between Australia and the UK and by inserting numbers of provisions to prevent tax avoidance.
The finalisation of this treaty has been keenly awaited by companies both in the UK and in Australia. It represents a major step forward for our trading and investment relations. This is a strong relationship between our two countries, this treaty will make it even stronger. Now I invite Sir Alastair to make some comments.
SIR ALASTAIR:
Treasurer, thank you very much indeed. Ladies and gentlemen good morning. As the Treasurer has said, a fully comprehensive double taxation agreement has been in place between our two countries for a number of years and has undergone two reviews. Conventions of this type are reviewed periodically to ensure that they take full account of changes in the taxation systems of the respective countries and best international practice. It is appropriate that we should now be signing s new comprehensive double tax convention between the UK and Australia. It is important for the UK to have a modern double taxation convention with Australia, a country with which we have enormous trading and investment links.
Not only does the convention further strengthen our ties with Australia, but it demonstrates the continuing warmth of the long-standing relationship between the two countries. The UK now has over a hundred double taxation conventions. We reached that century some six years ago and I know that Australia attaches equal importance to such conventions and that the Treasury and ATO have been active in double taxation negotiations in many parts of the world. These conventions reduce tax-related barriers to international trade and investment by providing a clear and dependable tax framework for businesses that operate in both treaty countries.
I am very pleased therefore that in entering into this convention with Australia, the UK will be modernising our network of conventions, in what to us is an extremely important country and part of the world. I look forward to the early implementation of the new convention in the hope that it will provide for many years, a stable framework in which trade and investment between the United Kingdom and Australia, and employment in both countries can continue to flourish. Thank you.
TREASURER:
Thank you. And I also thank the hard working tax officials for all of the work that they have done on this, it is a terrific outcome and I appreciate your efforts very much. Thank you.
JOURNALIST:
Treasurer has any modeling work been done on the potential economic benefits to Australia's Double Tax Agreement?
TREASURER:
Well we think it will be positive, I am not putting any figures on this. But to the extent that it increases two-way trade and investment, and we believe that it will have an overall economic benefit. We will probably say a bit more about that in the national interest statement.
As you know, these treaties are scrutinised by a joint committee of the Parliament, but when we looked at the US Treaty, and this follows very strongly in its footsteps, it was very positive overall and we expect that this will be positive as well.
JOURNALIST:
Treasurer, Sir Alastair talks about the warmth of the relationship between the two countries would that relationship be even warmer if Britain agreed to index pensions of British-born Australians?
TREASURER:
Well, the Australian Government has put the proposition to the British Government now for a long period of time and we have asked the British Government to index pensions that British citizens now living in Australia are entitled to receive. We continue to maintain our position and to urge the British Government to do that. As yet we haven't been successful. But can I put that in the context, we do have a very warm relationship, from time to time we disagree about matters. Whilst we disagree we are always very open and very upfront about those issues and in due course we hope to persuade Sir Alastair's Government round to the wisdom of our position.
JOURNALIST:
Treasurer are there any other nations Australia is pursuing a similar taxation treaty?
TREASURER:
Well we just signed one with the United States, we have signed them with the UK, we have an active program of pursuing with other major countries, major developed countries. I know Germany is one that we are looking at the moment. This was a recommendation which came out of the Ralph Review that we should modernise that. There are so many Australian companies that are now going overseas because they are looking for larger markets and we want to help them earn income offshore which they bring back to Australia, which is good for Australia. So that is why they are modernising these treaties.
JOURNALIST:
Treasurer just to get an indication on the economic benefit, can you say how much the treaty with the US has benefited, or will benefit Australian business?
TREASURER:
Well I think we put some material as part of the joint committee's deliberations in relation and that is on the record, I don't have it with me but we could get it for you later on if you wanted it.
JOURNALIST:
Do you expect the treaty with the UK to be more or less than that, then?
TREASURER:
The UK is the second largest investor here in Australia. The US is a little larger, so from that point of view, it may be a little different, but I have the feeling that there are numbers of Australian companies that use the UK not just as a base to do business direct, but as a regional headquarters. So that will bring additional benefits from that point of view.
JOURNALIST:
Has there been a strong lobby from those companies, or has it come from companies who are looking to establish in the UK?
TREASURER:
It has really come, the interest in this has really come about from Australian companies that are now earning large amounts of income in the UK, and want to be able to repatriate that income under an efficient taxation regime. And you think of some of the major Australian companies which now have substantial businesses outside Australia, some of them earning more revenue outside of Australia than they are in it. And the UK has been a great base for those companies. I should observe not every Australian company has done well in the UK as we know, but for many Australian companies it has been a wonderful base. OK, thanks very much.
JOURNALIST:
Treasurer can I just ask you about one more issue...
TREASURER:
One last question.
JOURNALIST:
Thank you.
TREASURER:
This is the last question.
JOURNALIST:
The jailing of Pauline Hanson, do you believe that closes the book on a fairly ugly chapter in Australian recent political history?
TREASURER:
Look, the trial of Pauline Hanson was in relation to fraud charges and the sentence has been brought down in relation to that. I think that should be separated from the political issues. This is not a political trial, this was a trial under fraud law. So I wouldn't say that this closes any political chapter. The political issues still have to be debated and political issues get resolved through the ballot box. This should be seen as something separate from that, this is a criminal trial proceeding in accordance with the criminal law. Thank you very much.