Australia’s tax treaty network is expanding to cover 80 per cent of foreign investments to support the ongoing economic recovery from COVID-19, the Treasurer’s office said in a statement on Wednesday.
Federal Treasurer Josh Frydenberg has revealed that a new plan will enable Australia to enter 10 new and updated tax treaties by 2023, growing an existing network of 45 bilateral treaties.
“The plan will ensure Australia’s tax treaty network will cover 80 per cent of foreign investment in Australia and about $6.3 trillion of Australia’s two-way trade and investment,” said Mr Frydenberg.
The advantage of undertaking this effort is said to improve tax system integrity through the establishment of a bilateral framework of cooperation on the prevention of tax evasion, the collection of tax debts and rules to address tax avoidance.
“Businesses will be provided with greater tax certainty which will encourage increased economic integration through foreign investment and trade,” Mr Frydenberg said of the benefits offered by the new plan.
The program will be split into two phases, with the negotiations beginning with India, Luxembourg and Iceland this year as part of phase one.
Phase two’s schedule includes negotiations with Greece, Portugal and Slovenia.
“In the 2020-21 and 2021-22 Budgets, the government provided $11.6 million to Treasury and the Australian Tax Office to support this expansion of our tax treaty network,” said Mr Frydenberg.
The 2021 Trade and Investment at a Glance report from DFAT found that foreign direct investment (FDI) into the Australian economy totalled $1,019,483 million for 2019, making it the 14th most popular destination for FDI in this year.
The federal government is currently accepting views from the public to inform the negotiations, alongside consulting with interested stakeholders.
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