House of Representatives

International Tax Agreements Amendment Bill (No. 1) 2007

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello MP)


Most favoured nation clauses require a country to enter into negotiations with a view to providing similar treatment to its treaty partner if it subsequently agrees with a third country to a certain specified tax treatment.


Source: Department of Foreign Affairs and Trade.


Australia's MFN obligations will be met by the conclusion of the new France Convention even though negotiators were not able to agree on satisfactory rules dealing with non-discrimination. Since the current French and Australian tax systems generally do not discriminate in ways that would breach non-discrimination rules, and European Union law constraints are likely to ensure that the French tax system remains non-discriminatory, the non-inclusion of such rules is unlikely to have a negative impact for taxpayers.


There are very few multilateral tax treaties, which reflect the widely differing economic interests and unique tax law structures of most countries.


See footnote 3 for details on the non-discrimination MFN obligation.


Most favoured nation clauses require a country to enter into negotiations with a view to providing similar treatment to its treaty partner if it subsequently agrees with a third country to a certain specified tax treatment.


Source: Department of Foreign Affairs and Trade.


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