Second Reading SpeechMr Pearce (Parliamentary Secretary to the Treasurer)
That this bill be now read a second time.
This bill will give the force of law to the renegotiated double tax agreement between Australia and Finland, which was signed on 20 November 2006. The bill will insert the text of the agreement with Finland into the International Tax Agreements Act 1953. This is a prerequisite to the new tax treaty's entry into force.
The bill repeals the schedules to the International Tax Agreements Act 1953 that give the force of law to the existing tax treaty with Finland.
The agreement will broadly update the taxation arrangements between Australia and Finland.
The agreement will substantially reduce withholding taxes on certain dividend, interest and royalty payments in line with those provided in our tax treaty arrangements with the United Kingdom, the United States and, more recently, with France and Norway. This will provide long-term benefits for business, reducing the cost for Australian based business to obtain intellectual property, equity and finance for expansion.
The agreement will assist trade and investment flows between Australia and Finland, and further demonstrates the government's commitment to update Australia's tax treaty network as recommended by the Review of Business Taxation and the Review of International Tax Arrangements. The treaty will strengthen our economic relations with Finland. Further, it will provide a positive economic environment for Australia and contribute to a larger and faster-growing Australian economy.
The new agreement achieves a balance of outcomes that will provide Australia with a competitive tax framework for international trade and investment while ensuring the Australian revenue base is sustainable and suitably protected.
The agreement includes rules to prevent tax discrimination against nationals and Australian businesses operating in Finland and vice versa.
The agreement serves as another step in facilitating a competitive and modem tax treaty network for companies located in Australia. The agreement will also satisfy Australia's most favoured nation obligations under the existing treaty with Finland.
Finally, I note the agreement will facilitate improved integrity aspects of administering and collecting tax from those with tax obligations in either or both countries. The agreement reflects the government's decision to incorporate enhanced information exchange provisions which meet modern OECD standards and to provide for reciprocal assistance in collection in future tax treaties where appropriate.
The government believes that the conclusion of the agreement will strengthen the integrity of Australia's tax treaty network through bilateral cooperation between countries to help ensure taxpayers pay their fair share of tax.
The agreement will enter into force after completion of the necessary processes in both countries and will have effect in accordance with its terms.
In accordance with those processes, the treaty was tabled in this place and referred to the Joint Standing Committee on Treaties. The committee has recommend that binding action be taken.
The enactment of this bill, and the satisfaction of the other procedures relating to proposed treaty actions, will complete the processes followed in Australia to bring the treaty into force.
Full details of the amendments are contained in the explanatory memorandum.
Debate (on motion by Ms Plibersek) adjourned.