Second ReadingConsideration resumed from 20 September.
Mr GEAR (Canning--Assistant Treasurer) (1.20 p.m.)--I move:
That the bill be now read a second time.
The International Tax Agreements Amendment Bill 1995 will provide legislative authority for the entry into force of the comprehensive double taxation agreement between Australia and the Czech Republic. The bill will insert the text of the agreement into the International Tax Agreements Act 1953 as a schedule to that Act.
The agreement with the Czech Republic was signed on 28 March 1995. The agreement allocates taxing rights over all substantial forms of income flowing between Australia and the Czech Republic. Details of the agreement were announced and copies made publicly available at the time of signature.
The agreement generally accords with the other comprehensive taxation agreements concluded by Australia in recent years. A feature of the agreement with the Czech Republic is that it is the first new agreement to include a revised dividends article which will have the effect of reducing Czech dividend withholding tax to five per cent in all cases where dividends are paid to an Australian resident company which holds directly at least 20 per cent of the capital of the Czech Republic company paying the dividends.
The Government believes that this new policy will go a long way to meeting the concerns expressed by the Australian business community that Australia's former tax treaty policy of limiting each country's foreign dividend withholding tax to a maximum of 15 per cent was a major disincentive to the repatriation of overseas earnings in the form of dividends to Australian resident shareholders.
The Government also believes that the agreement will contribute positively to the strengthening of trade, investment, and wider relationships between Australia and the Czech Republic.
The agreements will enter into force when diplomatic notes are exchanged advising that the necessary constitutional processes to give the agreement the force of law in both countries have been completed. The enactment of this bill will complete the processes required of Australia for those purposes.
It is not possible to accurately predict the eventual effect of the agreement on the revenue, but it is not expected to be significant.
Full details of the amendments are contained in the Explanatory Memorandum circulated to honourable members.
I commend the bill to the House.