Australia and Israel sign a new tax treaty

March 29, 2019 by J-Wire Newsdesk
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Australia and Israel have signed a new tax treaty which will open further opportunities for bilateral trade and investment according to a statement by Treasurer Josh Frydenberg.

Deputy Ambassador Ron Gersternfeld and Stuart Robert Screenshot

This follows the Federal Executive Council’s approval for Australia to sign the new tax treaty received earlier today. The Federal Executive Council is presided by the Governor-General.

In a joint statement with Assistant Treasurer Stuart Robert Josh Frydenberg said: “Australia and Israel share a close friendship and longstanding trade and investment ties.

The treaty was signed in Canberra by Stuart Robert and Israel’s Deputy Ambassador to Australia Ron Gerstenfeld.

In 2017-18 total merchandise trade between Australia and Israel was worth over $1 billion, and Israel’s investment in Australia in 2017 was $301 million.

This new tax treaty will further strengthen the friendship and commercial relations between our two countries and provide greater opportunities to grow those relationships.

Key features of the treaty include:

• Reduced withholding tax rates to create a more favourable bilateral investment environment and also make it cheaper for Australian business to access foreign capital and technology;

• Rules to reduce potential double taxation, which can deter investment; and

• Providing greater tax certainty to taxpayers in both jurisdictions.

Importantly, the new treaty also includes OECD/G20 base erosion and profit shifting (BEPS) recommendations, demonstrating the Morrison Government’s continued commitment to tackling international tax avoidance practices.

The new treaty will enter into force after both countries have completed their domestic requirements and instruments of ratification have been exchanged.

Legislation will be introduced into the Australian Parliament as soon as practicable to give the treaty the force of law in Australia.

Peter Wertheim, co-CEO of The Executive Council of Australian Jewry commented: “We warmly welcome the Australian government’s announcement that Australia and Israel have signed a new tax treaty which will open further opportunities for bilateral trade and investment.

In September 2015, the two countries first announced their intention to conclude an agreement aimed at eliminating or reducing the incidence of double taxation between the two jurisdictions, providing greater tax certainty for businesses and enhancing the integrity of both countries’ tax systems. Formal negotiations commenced 12 months later, and have now come to fruition.

A thriving trade and commerce deepen the bond between nations and peoples. The harmonisation of taxation arrangements is an important step towards even greater economic cooperation between Australia and Israel and will enhance the close and warm ties that already exist.

.Israeli technology and innovation across a range of vital industries including healthcare and renewable energy already contribute immensely to our quality of life in Australia. We expect that this agreement, once implemented, will enhance this contribution further and will also ensure that Australian businesses are able to fully exploit the enormous opportunities in the Israeli market.

There are opportunities for Australian companies to take greater advantage of Israel’s knowledge-based economy – particularly in the areas of biotechnology, ICT, education and training. The new Tax Treaty will also serve as an incentive for Israeli companies to view Australia as a regional base and as a supplier of sophisticated goods and services. This will be good for creating jobs and stimulating economic growth in both countries.”

 

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