The Assistant Treasurer, Senator Rod Kemp, today announced that, following an exchange of notes through the diplomatic channel indicating that the necessary procedures to give the agreement the force of law had been completed in each country, the Australia-Argentina Double Taxation Agreement entered into force on 30 December 1999.
The new tax agreement, Australia's first with a Latin American country, has been eagerly awaited by Australian companies and will provide a further boost to our growing business presence in Argentina. It will also encourage Argentine companies to expand their commercial relationships with Australia.
As the ninth largest foreign direct investor in Argentina with total Australian investment estimated at around $2.3 billion, Australian companies are active in the food, entertainment, insurance, port management, cold storage, retail, tourism and agriculture sectors in Argentina and also have significant mining interests in the country.
Signature of the agreement took place in Buenos Aires on 27 August 1999. Details of the agreement were made public at that time and legislation providing for the agreement to be given the force of law in Australia - the International Tax Agreements Amendment Act 1999 - received Royal Assent on 11 November 1999.
This is a comprehensive agreement for the avoidance of double taxation in relation to all income flowing between Australia and Argentina. The allocation of taxing rights between the countries under the agreement generally accords with those provided for in Australia's other modern comprehensive taxation agreements.
The agreement with Argentina will first have effect in Australia for withholding tax purposes in respect of income derived on or after 1 January 2000. It will first have effect for other Australian taxes in relation to income, profits or gains of any year of income beginning on or after 1 July 2000. The agreement will first have effect in Argentina for withholding tax purposes in relation to amounts derived on or after 1 January 2000. For other Argentine taxes covered by the agreement it will first apply in relation to tax chargeable for any tax year beginning on or after 1 January 2000. In relation to airline profits, the agreement has effect from 27 September 1988 being the date from which the air services agreement between the two countries took effect.
The agreement limits the withholding tax or other tax that the source country may apply on certain dividends, interest or royalties payable to residents of the other country. Details of the practical application of those tax rate limits in relation to Australian withholding tax or income tax imposed on an assessment basis are available at offices of the Australian Taxation Office.
Formal notification of the entry into force of the agreements will be published in the Gazette as soon as practicable.
MELBOURNE
6 January 2000
Media contacts: Richard Allsop Assistant Treasurer’s Office (03) 9650 7274
Michael Nugent Australian Taxation Office (02) 6216 2363