Press Release - Comprehensive Taxation Agreement Between Australia and the Slovak
Republic [24/08/99]
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NO.039
COMPREHENSIVE TAXATION AGREEMENT BETWEEN AUSTRALIA AND THE SLOVAK REPUBLIC
The Minister for Foreign Affairs for the Slovak Republic, Dr Eduard Kukan, and I signed
in Canberra today a comprehensive taxation agreement between Australia and the Slovak
Republic for the avoidance of double taxation and the prevention of fiscal evasion.
The new tax agreement will assist in the development of our emerging trade and
investment links with the Slovak Republic.
I am confident that it will be well received by the business communities in both
countries.
The agreement prevents double taxation by allocating taxing rights between Australia
and the Slovak Republic in respect of all forms of income flows between the two countries.
The basis of allocating these rights is substantially similar to that adopted in
Australia's other modern taxation agreements.
The new agreement will enter into force only after the Australian and Slovak
Governments have exchanged notes advising each other that the last of the necessary
constitutional processes to give the agreement the force of law in both countries has been
completed.
See attachment A for details of the agreement.
Copies of the agreement will be available at offices of the Australian Taxation Office
(ATO) and can also be accessed via the ATO's internet site at: http://www.ato.gov.au under the
heading What's New.
CANBERRA
24 August 1999
Media Contacts: Ken Allen Australian Taxation Office (02) 6216 1155
Matthew Guy Assistant Treasurer's Office (02) 6277 7360
ATTACHMENT A
The agreement provides for certain types of income to be taxed in full by the country
in which the income has its source. These include income from real property and alienation
of real property, business profits attributable to a 'permanent establishment', most
income from employment, most government remuneration, and income derived by entertainers
and sportspersons. This agreement also contains specific rules concerning income, profits
or gains arising from indirect alienation of real property following the Federal Court's
decision in the Lamesa Holdings BV case. Other types of income may be taxed only in
the country of residence of the recipient. These include shipping or aircraft profits
derived from international operations, and subject to certain exceptions, income derived
by an individual from professional or other independent services.
Dividends, interest and royalties may be taxed by both countries. As this agreement was
negotiated before Australia changed its tax treaty policy of seeking reduced withholding
tax rates for non-portfolio dividends, a general dividend withholding tax rate limit of
15 per cent applies. A source country tax rate limit of 10 per cent will
generally apply for both countries in the case of interest and royalties.
Australia’s domestic withholding tax exemption will continue to apply for franked
dividends paid to residents of the Slovak Republic, whilst the withholding tax applicable
to outgoing unfranked dividends will generally be reduced from 30 to 15 per cent in
respect of unfranked dividend payments.
Subject to specific rules in relation to real property, business assets, ships or
aircraft, and some shares, capital gains are to be taxed in accordance with the respective
domestic laws.
The new agreement will enter into force only after the Australian and Slovak
Governments have exchanged diplomatic notes, advising each other that the last of the
necessary constitutional processes to give the agreement the force of law in their
respective countries has been completed. Reflecting the Government’s commitment to
open and accountable treaty making, the agreement and a National Interest Analysis will be
tabled in the Parliament for review by the Joint Standing Committee on Treaties. In
Australia, legislation will also be necessary to give the agreement the force of law and a
Bill for that purpose will be introduced into the Parliament as soon as practicable.
Upon entry into force, the agreement will have effect in Australia for withholding tax
purposes in relation to income derived by a resident of the Slovak Republic on or after
1 January in the calendar year next following that in which it enters into force. In
respect of tax other than withholding tax, the agreement will have effect in Australia in
relation to income, profits, or gains of any year of income beginning on or after
1 July in the calendar year next following that in which it enters into force.
The agreement will have effect in the Slovak Republic for withholding tax purposes in
relation to amounts derived on or after 1 January in the calendar year next following that
in which it enters into force. In respect of other Slovak tax, the agreement will have
effect in relation to tax chargeable for any taxable year starting from 1 January in
the calendar year next following that in which it enters into force.
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