C098/03
24 October 2003
AUSTRALIA-MALAYSIA DOUBLE TAXATION AGREEMENT AMENDED
Trade and investment relations between Australia and Malaysia will strengthen
following amendments to the Australia-Malaysia Double Taxation Agreement,
Minister for Revenue and Assistant Treasurer, Senator Helen Coonan announced
today.
"The signing of the Second Protocol, which took place in Malaysia
last year, further demonstrates the Government's commitment to modernising
Australia's tax treaty network," Senator Coonan said.
"The changes made by the Protocol, which entered into force in July
this year, will assist growing trade and investment flows between our
two countries."
Malaysia is Australia's third largest trading partner in ASEAN and the
nation's eleventh largest partner overall. Australia is Malaysia's twelfth
largest export market for goods and a major provider of education services.
"The Second Protocol updates a number of Articles in the Double
Taxation Agreement including those dealing with associated enterprises,
dividends, royalties and other income," Senator Coonan said.
"It also protects the revenue by excluding persons from receiving
treaty benefits, who benefit from the preferential tax treatment under
the Labuan offshore business activity regime, and other substantially
similar regimes."
The Second Protocol will update the tax sparing provisions in the Double
Tax Agreement to reflect changes to the Malaysian tax incentives legislation
and also extend the operation of the tax sparing provisions to 30 June
2003, at which time they will permanently expire.
Tax sparing refers to the situation where tax forgone (eg: in the form
of tax holidays or tax reductions) by a foreign country on the income
of an Australian resident taxpayer is deemed to have been paid (ie: the
tax foregone is credited as if actually paid, under Australia's foreign
tax credit system).
Following the exchange of diplomatic notes between the two countries,
the Second Protocol will have effect in Australia in relation to the
tax sparing provisions for any year of income beginning on or after 1
July 1992.
In all other cases the Protocol and the associated exchange of letters
will have effect in Australia for any year of income beginning on or
after 1 July 2004.
Details of the agreement were made public at the time of signature and
are available on the Department of the Treasury's internet site at http://www.treasury.gov.au/content/tax_treaties.asp