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This is a Bill, not an Act. For current law, see the Acts databases.
1996-97
The Parliament of
the
Commonwealth of
Australia
HOUSE OF
REPRESENTATIVES
Presented and read a first
time
International
Tax Agreements Amendment Bill (No. 1)
1997
No. ,
1997
(Treasury)
A Bill
for an Act to amend the International Tax Agreements Act 1953, and for
related purposes
Contents
International Tax Agreements Act 1953 7itaa1h1.html
A Bill for an Act to amend the International Tax
Agreements Act 1953, and for related purposes
The Parliament of Australia enacts:
This Act may be cited as the International Tax Agreements Amendment
Act (No. 1) 1997.
This Act commences on the day on which it receives the Royal
Assent.
Each Act that is specified in a Schedule to this Act is amended or
repealed as set out in the applicable items in the Schedule concerned, and any
other item in a Schedule to this Act has effect according to its
terms.
International
Tax Agreements Act 1953
1 Subsection 3(1) (at the end of the definition
of the Vietnamese agreement)
Add “, as amended by the Vietnamese notes”.
2 Subsection 3(1)
Insert:
the Vietnamese notes means the Exchange of Notes between the
Government of Australia and the Government of the Socialist Republic of Vietnam
amending the Vietnamese agreement, that was carried out on 22 November 1996. A
copy of the Notes is set out in Schedule 38A.
3 After section 11ZC
Insert:
(1) Subject to this Act, on or after the date of entry into force of the
Vietnamese notes, the provisions of the notes, so far as those provisions affect
Australian tax, have the force of law according to their tenor.
(2) The Commissioner may amend an assessment made before the date of entry
into force of the Vietnamese notes for the purpose of giving effect to
subsection (1).
4 Schedule 38, paragraph
9.3
Omit “Where profits of which”, substitute “Where profits
on which”.
5 After Schedule 38
Insert:
N° ALA 96/568
The Department of Foreign Affairs
and Trade presents its compliments to the Embassy of the Socialist Republic of
Vietnam and has the honour to refer to the Agreement between the Government of
Australia and the Government of the Socialist Republic of Vietnam for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect
to Taxes on Income, done at Hanoi on 13 April 1992 (hereinafter
referred to as “the Head Agreement”).
The Department notes
that paragraphs 3, 4 and 5 of Article 23 of the Head Agreement provide for
“tax sparing” by Australia in relation to tax forgone by Vietnam
under the provisions of certain Vietnamese tax laws.
The Department has
the honour to propose that Article 23 be amended as follows:
I. Paragraph
4 shall be deleted and replaced with the following:
“4. In
paragraph 3, the term “Vietnamese tax forgone” means, subject to
paragraphs 5 and 6, the total amount which, under the law of Vietnam relating to
Vietnamese tax and in accordance with this Agreement, would have been payable as
Vietnamese tax on income but for an exemption from, or reduction of, Vietnamese
tax on that income (which total amount shall be deemed to be no greater than 20
per cent of the Vietnamese taxable income that relates to the income the subject
of the exemption or reduction), less the actual amount of Vietnamese tax payable
on that income.”
II. Paragraph 5 shall be deleted and replaced with
the following:
“5. Paragraph 4 shall apply only in respect of
exemptions or reductions resulting from the operation
of:
(a) (i) Articles 26, 27, 28 or 32 of the Law on Foreign Investment in
Vietnam 1987; or
(ii) Articles 66, 67, 68, 69 or 72 of Decree No. 18-CP
on implementing regulations of the Law on Foreign Investment in Vietnam dated
16 April 1993; or
(iii) Circular No. 48-TC-TCT on Profits Tax
Rates and Exemption from and Reduction of Profits Tax dated
30 June 1993; or
(iv) Part A of Part II of Circular No.
51-TC-TCT on Taxation of Foreign Investment in Vietnam dated
3 July 1993; or
(v) Decree No. 87-CP on Build-Operate-Transfer
(BOT) Contracts dated 23 November 1993 and the regulations issued with
that Decree,
to the extent those provisions were in force on, and have
not been modified since, the date of this Note, or have been modified only in
minor respects so as not to affect their general character; or
(b) any
other provision which may subsequently be made granting an exemption from, or
reduction of, Vietnamese tax which the Treasurer of Australia and the Minister
of Finance of Vietnam determine from time to time in letters exchanged for this
purpose to be provisions to which this paragraph applies. Subject to its terms,
such a determination of applicable provisions shall be valid for as long as
those provisions are not modified after the date of that determination or have
been modified only in minor respects so as not to affect their general
character.”
III. The following paragraphs shall be inserted after
paragraph 5:
“6. Paragraph 4 shall apply only to the extent that
the exemption or reduction is granted in respect of Vietnamese tax on income
from the following activities:
(a) construction of infrastructure
facilities including communications, power production and supply, construction
of infrastructure facilities for the export processing and industry intensive
zones and information and telecommunication facilities in mountainous areas in
which naturally and socio economically difficult conditions exist;
or
(b) plantation of new forests for commercial exploitation;
or
(c) extremely important activities listed in the investment portfolio
announced by the Vietnamese State Committee for Co-operation and Investment for
each period; or
(d) exploitation of natural resources except oil, gas or
rare and precious natural resources; or
(e) heavy industry projects
including metallurgy, mechanical engineering production, base chemical
production, cement production, electrical and electronic materials
manufacturing, fertiliser manufacturing and anti epidemic medicines for use in
animal production or forestry; or
(f) plantation of long term industrial
crops; or
(g) activities in mountainous areas in which naturally and
socio economically difficult conditions exist including hotel undertaking
projects; or
(h) any project satisfying at least 2 of the following
criteria:
(i) employing at least 500 Vietnamese;
or
(ii) applying advanced technology which satisfies the requirements
listed in Article 4 of the Ordinance on the Transfer of Foreign Technology dated
5 December 1988, subject to the approval of the Ministry of Science
and Technology and Environment; or
(iii) exporting at least 80% of the
products manufactured by the project itself; or
(iv) the prescribed
capital or contributed capital for the implementation of the business
co-operation contract is at least US $10 million dollars;
or
(j) projects carrying out infrastructure activities within a definite
time period in which the foreign partner transfers the infrastructure to the
Vietnamese Government without any compensation.
7. Notwithstanding the
operation of paragraph 4, Vietnamese tax forgone shall not be deemed to have
been paid in respect of income derived from:
(a) banking, insurance,
consulting, accounting, auditing and commercial services of any kind;
or
(b) the operation of ships or aircraft, other than ships or aircraft
operated principally from places in Vietnam and used solely in carrying on a
business in Vietnam; or
(c) any scheme entered into by an Australian
resident with the purpose of using Vietnam as a conduit for income or as a
location of property in order to evade or avoid Australian tax through the
exploitation of the Australian foreign tax credit provisions or to confer a
benefit on a person who is neither a resident of Australia, nor of
Vietnam.
8. Paragraphs 4, 5, 6 and 7 shall not apply in relation to
income derived in any year of income after the year of income that ends
on:
(a) 30 June 2003; or
(b) any later date that may be
agreed by the Treasurer of Australia and the Minister of Finance of Vietnam in
letters exchanged for this purpose,
whichever is the later in time
occurring.”
IV. Paragraph 6 shall be renumbered as paragraph
9.
If the foregoing is acceptable to the Government of the Socialist
Republic of Vietnam, the Department has the honour to propose that this Note and
the Embassy’s confirmatory Note in reply shall constitute an Agreement
between the Government of Australia and the Government of the Socialist Republic
of Vietnam to amend the Head Agreement. The amendment to the Head Agreement
shall enter into force when the two Governments have notified each other by a
further exchange of notes that they have completed their domestic requirements
for the entry into force of such amendment. The amendment to the Head Agreement
shall have effect in respect of Australian tax in relation to income, profits or
gains of the year of income that began on 1 July 1993 and of
subsequent years of income.
The Department of Foreign Affairs and Trade
avails itself of this opportunity to renew to the Embassy of the Socialist
Republic of Vietnam the assurances of its highest
consideration.
CANBERRA
22 November
1996
Note in Reply
The Embassy of the Socialist
Republic of Vietnam presents its compliments to the Department of Foreign
Affairs and Trade and has the honour to refer to the Department’s Note
No ALA 96/568 of 22 November 1996 which reads as
follows:
“[Text of Note No ALA 96/568 of 22 November
1996 of the Department of Foreign Affairs and Trade of the Government of
Australia.]”
The Embassy has the honour to advise that the
Department’s proposal is acceptable to the Government of the Socialist
Republic of Vietnam and that accordingly the Agreement between the Government of
Australia and the Government of the Socialist Republic of Vietnam for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect
to Taxes on Income, done at Hanoi on 13 April 1992, is to be regarded as amended
from the date when the two Governments have notified each other by a further
exchange of notes that they have completed their domestic requirements for the
entry into force of such amendment. The amendment to the Head Agreement shall
have effect in respect of Australian tax in relation to income, profits or gains
of the year of income that began on 1 July 1993 and of subsequent
years of income.
The Embassy of the Socialist Republic of Vietnam avails
itself of this opportunity to renew to the Department of Foreign Affairs and
Trade the assurances of its highest
consideration.
CANBERRA
22 November
1996
6 Application
The amendment made by item 4 of this Schedule applies to assessments in
respect of income of the first year of income to which the Vietnamese agreement,
as defined under subsection 3(1) of the International Tax Agreements Act
1953, applied and all later years of income.