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This is a Bill, not an Act. For current law, see the Acts databases.
1998-1999-2000-2001
The
Parliament of the
Commonwealth of
Australia
HOUSE OF
REPRESENTATIVES
Presented and read a first
time
International
Tax Agreements Amendment Bill 2001
No.
, 2001
(Treasury)
A
Bill for an Act to amend the International Tax Agreements Act 1953, and
for related purposes
Contents
International Tax Agreements Act
1953 3
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 2001.
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repealed as set out in the applicable items in the Schedule concerned, and any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)
Insert:
the Russian agreement means the Agreement between the
Government of Australia and the Government of the Russian Federation for the
avoidance of double taxation and the prevention of fiscal evasion with respect
to taxes on income and the protocol to that agreement, being the agreement and
protocol a copy of each of which in the English language is set out in
Schedule 46.
2 After section 11ZJ
Insert:
Subject to this Act, on or after the date of entry into force of the
Russian agreement, the provisions of the agreement, so far as those provisions
affect Australian tax, have the force of law according to their tenor.
3 At the end of the Act
Add:
Note: See section 3
THE GOVERNMENT OF AUSTRALIA AND THE GOVERNMENT OF THE RUSSIAN
FEDERATION,
DESIRING to conclude an Agreement for the avoidance of double
taxation and the prevention of fiscal evasion with respect to taxes on
income,
HAVE AGREED as follows:
This Agreement shall apply to persons who are residents of one or both
of the Contracting States.
1 The existing taxes to which this Agreement shall apply
are:
(a) in Australia:
the income tax, and the resource rent tax
in respect of offshore projects relating to exploration for or exploitation of
petroleum resources, imposed under the federal law of Australia;
(b) in
Russia:
(i) tax on profits (income) of enterprises and organisations;
and
(ii) tax on the income of individuals.
2 This Agreement shall
apply also to any identical or substantially similar taxes which are imposed
under the federal law of Australia or the federal law of Russia after the date
of signature of this Agreement in addition to, or in place of, the existing
taxes.
1 For the purposes of this Agreement, unless the context otherwise
requires:
(a) the terms “Contracting State” and “other
Contracting State” mean Australia or Russia, as the context
requires;
(b) — the term “Australia” means the
territory of Australia including only the following external
territories:
(i) the Territory of Norfolk Island;
(ii) the
Territory of Christmas Island;
(iii) the Territory of Cocos (Keeling)
Islands;
(iv) the Territory of Ashmore and Cartier
Islands;
(v) the Territory of Heard Island and McDonald Islands;
and
(vi) the Coral Sea Islands Territory,
and includes the
exclusive economic zone and continental shelf of Australia (including the
territories specified) in respect of which there is for the time being in force,
consistently with international law, a law of Australia dealing with the
exploration for or exploitation of any natural resources of the seabed and
subsoil of the continental shelf;
— the term “Russia”
means the territory of the Russian Federation and includes its exclusive
economic zone and continental shelf, defined in accordance with international
law;
(c) the term “Australian tax” means tax imposed by
Australia, being tax to which this Agreement applies by virtue of Article
2;
(d) the term “Russian tax” means tax imposed by Russia,
being tax to which this Agreement applies by virtue of Article 2;
(e) the
term “person” includes an individual, an enterprise, a company and
any other body of persons;
(f) the term “company” means any
body corporate or any entity which is treated as a company or body corporate for
tax purposes;
(g) the terms “enterprise of a Contracting
State” and “enterprise of the other Contracting State” mean an
enterprise carried on by a resident of Australia or an enterprise carried on by
a resident of Russia, as the context requires;
(h) the term
“international traffic” means any transportation by a ship or
aircraft operated by an enterprise of a Contracting State, except when the ship
or aircraft is operated solely between places in the other Contracting
State;
(i) the term “competent authority”
means:
— in the case of Australia, the Commissioner of Taxation or
an authorised representative of the Commissioner; and
— in the case
of Russia, the Ministry of Finance of the Russian Federation or its authorised
representative;
(j) the term “tax” means Australian tax or
Russian tax, as the context requires, but does not include any penalty or
interest imposed under the law of either Contracting State relating to its
tax.
2 As regards the application of this Agreement at any time by a
Contracting State, any term not defined in this Agreement shall, unless the
context otherwise requires, have the meaning which it has at that time under the
law of that State. In case of divergence between the law of that State
concerning the taxes to which this Agreement applies and any other law of that
State the law concerning the taxes to which this Agreement applies shall
prevail.
1 For the purposes of this Agreement, a person is a resident of a
Contracting State if the person is a resident of that State under the law of
that State relating to its tax.
2 A person is not a resident of a
Contracting State for the purposes of this Agreement if the person is liable to
tax in that State in respect only of income from sources in that
State.
3 Where by reason of the preceding provisions of this Article a
person, being an individual, is a resident of both Contracting States, then the
person shall be deemed to be a resident solely of the Contracting State in which
a permanent home is available to the person, or if a permanent home is available
to the person in both Contracting States, or in neither of them, the person
shall be deemed to be a resident solely of the Contracting State with which the
person’s personal and economic relations are closer. For the purpose of
this paragraph, an individual’s citizenship of one of the Contracting
States shall be a factor in determining the degree of the individual’s
personal and economic relations with that Contracting State.
4 Where by
reason of the provisions of paragraph 1 a person other than an individual is a
resident of both Contracting States, then it shall be deemed to be a resident
solely of the State in which its place of effective management is
situated.
1 For the purposes of this Agreement, the term “permanent
establishment” means a fixed place of business through which an enterprise
of a Contracting State wholly or partly carries out business activities in the
other State.
2 The term “permanent establishment”
includes:
(a) a place of management;
(b) a branch;
(c) an
office;
(d) a factory;
(e) a workshop;
(f) a mine, an oil
or gas well, a quarry or any other place relating to the exploration for or
exploitation of natural resources;
(g) an agricultural, pastoral or
forestry property; and
(h) a building site or construction, installation
or assembly project or supervisory activities in connection with them, but only
if such site, project or activities continue for a period of more than 12
months.
3 An enterprise shall not be deemed to have a permanent
establishment merely by reason of:
(a) the use of facilities solely for
the purpose of storage or display of goods or merchandise belonging to the
enterprise; or
(b) the maintenance of a stock of goods or merchandise
belonging to the enterprise solely for the purpose of storage or display;
or
(c) the maintenance of a stock of goods or merchandise belonging to
the enterprise solely for the purpose of processing by another enterprise;
or
(d) the maintenance of a fixed place of business solely for the
purpose of purchasing goods or merchandise, or for collecting information, for
the enterprise; or
(e) the maintenance of a fixed place of business
solely for the purpose of activities which have a preparatory or auxiliary
character for the enterprise, such as advertising or scientific
research.
4 Notwithstanding the provisions of the preceding paragraphs,
an enterprise shall be deemed to have a permanent establishment in a Contracting
State and to carry on business through that permanent establishment
if:
(a) a person acting in a Contracting State on behalf of an enterprise
of the other Contracting State manufactures or processes in the firstmentioned
State for the enterprise goods or merchandise belonging to the enterprise;
or
(b) heavy industrial equipment including, for example, but not limited
to, a platform, installation, drilling rig, or heavy machinery is being used in
the firstmentioned State by, for or under contract with the
enterprise.
5 A person acting in a Contracting State on behalf of an
enterprise of the other Contracting State — other than an agent of an
independent status to whom paragraph 6 applies — shall be deemed to be a
permanent establishment of that enterprise in the firstmentioned State if the
person:
(a) has, and habitually exercises in that State, an authority to
conclude contracts on behalf of the enterprise, unless the person’s
activities are limited to the purchase of goods or merchandise for the
enterprise; or
(b) has no such authority but maintains in the
firstmentioned State a stock of goods or merchandise from which delivery is made
within that State on behalf of the enterprise.
6 An enterprise of a
Contracting State shall not be deemed to have a permanent establishment in the
other Contracting State merely because it carries on business in that other
State through a person who is a broker, general commission agent or any other
agent of an independent status and is acting in the ordinary course of the
person’s business.
7 The fact that a company which is a resident of
a Contracting State controls or is controlled by a company which is a resident
of the other Contracting State, or which carries on business in that other State
(whether through a permanent establishment or otherwise), shall not of itself
make either company a permanent establishment of the other.
1 Income from real property may be taxed in the Contracting State where
such property is situated.
2 In this Article, the term “real
property”:
(a) for Australia, has the meaning which it has under
the law of Australia, and includes:
(i) land and any other interest in or
over land, whether improved or not, including a right to explore for mineral,
oil or gas deposits or other natural resources, and a right to mine those
deposits or resources; and
(ii) a right to receive variable or fixed
payments either as consideration for or in respect of the exploitation of, or
the right to explore for or exploit, mineral, oil or gas deposits, quarries or
other places of extraction or exploitation of natural resources;
(b) for
Russia, means immovable property according to the law of Russia, and
includes:
(i) property accessory to immovable property;
and
(ii) rights known as usufruct of immovable property;
and
(iii) rights to which the provisions of the law respecting landed
property apply; and
(iv) a right to receive variable or fixed payments
either as consideration for or in respect of the exploitation of, or the right
to explore for or exploit, mineral, oil or gas deposits, quarries or other
places of extraction or exploitation of natural resources; and
(c) for
both Contracting States does not include ships, boats and aircraft.
3 Any
interest or right referred to in paragraph 2 shall be regarded as situated where
the land, mineral, oil or gas deposits, quarries or natural resources, as the
case may be, are situated or where the exploration may take place.
4 The
provisions of paragraph 1 shall apply to income derived from the direct use,
letting, or use in any other form of real property.
5 The provisions of
paragraphs 1, 3 and 4 shall also apply to income from real property of an
enterprise and to income from real property used for the performance of
independent personal services.
1 The profits of an enterprise of a Contracting State shall be taxable
only in that State unless the enterprise carries on business in the other
Contracting State through a permanent establishment situated in that other
State. If the enterprise carries on business in that manner, the profits of the
enterprise may be taxed in the other State but only so much of them as is
attributable to that permanent establishment.
2 Subject to the provisions
of paragraph 3, where an enterprise of a Contracting State carries on business
in the other Contracting State through a permanent establishment situated in
that other State, there shall in each Contracting State be attributed to that
permanent establishment the profits which it might reasonably be expected to
make if it were a distinct and separate enterprise engaged in the same or
similar activities under the same or similar conditions and dealing wholly
independently with the enterprise of which it is a permanent establishment or
with other enterprises with which it deals.
3 In determining the profits
of a permanent establishment, there shall be allowed as deductions expenses of
the enterprise, being expenses which are incurred for the purposes of the
permanent establishment (including executive and general administrative expenses
so incurred) and which would be deductible if the permanent establishment were
an independent entity which paid those expenses, whether incurred in the
Contracting State in which the permanent establishment is situated or
elsewhere.
4 No profits shall be attributed to a permanent establishment
by reason of the mere purchase by that permanent establishment of goods or
merchandise for the enterprise.
5 Where profits include items which are
dealt with separately in other Articles of this Agreement, then the provisions
of those Articles shall not be affected by the provisions of this
Article.
1 Profits of an enterprise of a Contracting State derived from the
operation of ships or aircraft shall be taxable only in that
State.
2 Notwithstanding the provisions of paragraph 1, such profits may
be taxed in the other Contracting State to the extent that they are profits
derived from ship or aircraft operations confined solely to places in that other
State.
3 The profits to which the provisions of paragraphs 1 and 2 apply
include profits from the operation of ships or aircraft derived through
participation in a pool service or other profit sharing
arrangement.
1 Where:
(a) an enterprise of a Contracting State participates
directly or indirectly in the management, control or capital of an enterprise of
the other Contracting State; or
(b) the same persons participate directly
or indirectly in the management, control or capital of an enterprise of a
Contracting State and an enterprise of the other Contracting State,
and
in either case conditions operate between the two enterprises in their
commercial or financial relations which differ from those which might reasonably
be expected to operate between independent enterprises dealing wholly
independently with one another, then any profits which, but for those
conditions, might reasonably have been expected to accrue to one of the
enterprises but, by reason of those conditions, have not so accrued, may be
included in the profits of that enterprise and taxed
accordingly.
2 Nothing in this Article shall affect the application of
any law of a Contracting State relating to the determination of the tax
liability of a person, including where the information available to the
competent authority of that State is inadequate to determine the profits
accruing to an enterprise, provided that that law shall be applied, so far as it
is practicable to do so, consistently with the principles of this
Article.
3 Where profits on which an enterprise of a Contracting State
has been charged to tax in that State are also included, by virtue of the
provisions of paragraph 1 or 2, in the profits of an enterprise of the other
Contracting State and charged to tax in that other State, and the profits so
included are profits which might reasonably have been expected to have accrued
to that enterprise of the other State if the conditions operative between the
enterprises had been those which might reasonably have been expected to have
operated between independent enterprises dealing wholly independently with one
another, then the firstmentioned State shall make an appropriate
adjustment to the amount of tax charged on those profits in the firstmentioned
State. In determining such an adjustment, due regard shall be had to the other
provisions of this Agreement and for this purpose the competent authorities of
the Contracting States shall if necessary consult each other.
1 Dividends paid by a company which is a resident of a Contracting
State for the purposes of its tax, being dividends to which a resident of the
other Contracting State is beneficially entitled, may be taxed in that other
State.
2 However, such dividends may also be taxed in the Contracting
State of which the company paying the dividends is a resident for the purposes
of its tax, and according to the law of that State, but the tax so charged shall
not exceed:
(a) 5 per cent of the gross amount of the
dividends:
(i) to the extent to which those dividends are paid out of
profits that have borne the normal rate of tax, where those dividends are paid
to a company (other than a partnership) which holds directly at least 10 per
cent of the capital of the company paying the dividends;
and
(ii) provided that the resident of the other Contracting State has
invested a minimum of 700,000 Australian Dollars or an equivalent amount in
Russian Roubles in the capital of that company; and
(iii) where, if the
dividends are paid by a company that is resident in Russia, the dividends are
exempt from Australian tax; and
(b) 15 per cent of the gross amount of
the dividends in all other cases.
3 For the purposes of
subparagraph (a) of paragraph 2 of this Article, profits have borne the
normal rate of tax:
(a) in Australia, to the extent to which the dividends have credits
attached for tax paid on their profits by Australian companies in accordance
with its law relating to tax; and
(b) in Russia, to the extent that they
are assessable to tax.
4 The term “dividends” as used in this
Article means income from shares, as well as other amounts which are subjected
to the same taxation treatment as income from shares by the law of the State of
which the company making the distribution is a resident for the purposes of its
tax.
5 The provisions of paragraphs 1 and 2 shall not apply if the person
beneficially entitled to the dividends, being a resident of a Contracting State,
carries on business in the other Contracting State of which the company paying
the dividends is a resident, through a permanent establishment situated in that
other State, or performs in that other State independent personal services from
a fixed base situated in that other State, and the holding in respect of which
the dividends are paid is effectively connected with that permanent
establishment or fixed base. In that case the provisions of Article 7 or Article
14, as the case may be, shall apply.
6 Where a company which is a
resident of a Contracting State derives profits or income from the other
Contracting State, that other State may not impose any tax on the dividends paid
by the company — being dividends to which a person who is not a resident
of the other Contracting State is beneficially entitled — except insofar
as the holding in respect of which such dividends are paid is effectively
connected with a permanent establishment or a fixed base situated in that other
State, even if the dividends paid consist wholly or partly of profits or income
arising in such other State. This paragraph shall not apply in relation to
dividends paid by any company which is a resident of a Contracting State for the
purposes of its tax and which is also a resident of the other Contracting State
for the purposes of the other Contracting State’s tax.
1 Interest arising in a Contracting State, being interest to which a
resident of the other Contracting State is beneficially entitled, may be taxed
in that other State.
2 However, that interest may also be taxed in the
Contracting State in which it arises, and according to the law of that State,
but the tax so charged shall not exceed 10 per cent of the gross amount of the
interest.
3 The term “interest” in this Article includes
interest from Government securities or from bonds or debentures, including
premiums and prizes attaching to such securities, bonds and debentures, whether
or not secured by mortgage and whether or not carrying a right to participate in
profits, interest from any other form of indebtedness and all other income
assimilated to income from money lent by the law, relating to tax, of the
Contracting State in which the income arises.
4 The provisions of
paragraphs 1 and 2 shall not apply if the person beneficially entitled to the
interest, being a resident of a Contracting State, carries on business in the
other Contracting State, in which the interest arises, through a permanent
establishment situated in that other State, or performs in that other State
independent personal services from a fixed base situated in that other State,
and the indebtedness in respect of which the interest is paid is effectively
connected with that permanent establishment or fixed base. In that case the
provisions of Article 7 or Article 14, as the case may be, shall
apply.
5 Interest shall be deemed to arise in a Contracting State when
the payer is that State itself, a political subdivision or a local authority of
that State, or a person who is a resident of that State for the purposes of its
tax. Where, however, the person paying the interest, whether the person is a
resident of a Contracting State or not, has in a Contracting State or outside
both Contracting States a permanent establishment or fixed base in connection
with which the indebtedness on which the interest is paid was incurred, and that
interest is borne by that permanent establishment or fixed base, then the
interest shall be deemed to arise in the State in which the permanent
establishment or fixed base is situated.
6 Where, by reason of a special
relationship between the payer and the person beneficially entitled to the
interest, or between both of them and some other person, the amount of the
interest paid, having regard to the indebtedness for which it is paid, exceeds
the amount which might reasonably have been expected to have been agreed upon by
the payer and the person so entitled in the absence of that relationship, the
provisions of this Article shall apply only to the lastmentioned amount. In that
case the excess part of the amount of the interest paid shall remain taxable
according to the law of each Contracting State, due regard being had to the
other provisions of this Agreement.
1 Royalties arising in a Contracting State, being royalties to which a
resident of the other Contracting State is beneficially entitled, may be taxed
in that other State.
2 However, those royalties may also be taxed in the
Contracting State in which they arise, and according to the law of that State,
but the tax so charged shall not exceed 10 per cent of the gross amount of the
royalties.
3 The term “royalties” in this Article means
amounts paid or credited as due and payable, whether periodical or not, and
however described or computed, to the extent to which they are made as
consideration for:
(a) the use of, or the right to use, any copyright,
patent, design or model, plan, secret formula or process, trademark or other
like property or right; or
(b) the use of, or the right to use, any
industrial, commercial or scientific equipment; or
(c) the supply of
scientific, technical, industrial or commercial knowledge or information;
or
(d) the supply of any assistance that is incidental, ancillary and
subsidiary to, and is furnished as a means of enabling the application or
enjoyment of, any such property or right as is mentioned in
subparagraph (a), any such equipment as is mentioned in
subparagraph (b) or any such knowledge or information as is mentioned in
subparagraph (c); or
(e) the use of, or the right to
use:
(i) motion picture films; or
(ii) films or video tapes for
use in connection with television; or
(iii) tapes for use in connection
with radio broadcasting; or
(f) the reception of, or the right to
receive, visual images or sounds, or both, transmitted to the public
by:
(i) satellite; or
(ii) cable, optic fibre or similar
technology; or
(g) the use in connection with television broadcasting or
radio broadcasting, or the right to use in connection with television
broadcasting or radio broadcasting, visual images or sounds, or both,
transmitted by:
(i) satellite; or
(ii) cable, optic fibre or
similar technology; or
(h) the use of, or the right to use, some or all
of the part of the radiofrequency spectrum specified in a relevant licence;
or
(i) total or partial forbearance in respect of the use or supply of any
property or right referred to in this paragraph.
4 The provisions of
paragraphs 1 and 2 shall not apply if the person beneficially entitled to the
royalties, being a resident of a Contracting State, carries on business in the
other Contracting State, in which the royalties arise, through a permanent
establishment situated in that other State, or performs in that other State
independent personal services from a fixed base situated in that other State,
and the property or right in respect of which the royalties are paid or credited
is effectively connected with that permanent establishment or fixed base. In
that case the provisions of Article 7 or Article 14, as the case may be, shall
apply.
5 Royalties shall be deemed to arise in a Contracting State when
the payer is that State itself, a political subdivision or a local authority of
that State, or a person who is a resident of that State for the purposes of its
tax. Where, however, the person paying the royalties, whether the person is a
resident of a Contracting State or not, has in a Contracting State or outside
both Contracting States a permanent establishment or fixed base in connection
with which the liability to pay the royalties was incurred, and the royalties
are borne by the permanent establishment or fixed base, then the royalties shall
be deemed to arise in the State in which the permanent establishment or fixed
base is situated.
6 Where, owing to a special relationship between the
payer and the person beneficially entitled to the royalties, or between both of
them and some other person, the amount of the royalties paid or credited, having
regard to what they are paid or credited for, exceeds the amount which might
reasonably have been expected to have been agreed upon by the payer and the
person so entitled in the absence of such relationship, the provisions of this
Article shall apply only to the lastmentioned amount. In that case, the excess
part of the amount of the royalties paid or credited shall remain taxable
according to the law of each Contracting State, due regard being had to the
other provisions of this Agreement.
1 Income or profits derived by a resident of a Contracting State from
the alienation of real property situated in the other Contracting State may be
taxed in that other State. The meaning of the term “real property”,
and its situation, shall be determined in accordance with Article
6.
2 Income or profits from the alienation of property, other than real
property, that forms part of the business property of a permanent establishment
which an enterprise of a Contracting State has in the other Contracting State or
pertains to a fixed base available in that other State to a resident of the
firstmentioned State for the purpose of performing independent personal
services, including income or profits from the alienation of that permanent
establishment (alone or with the whole enterprise) or of that fixed base, may be
taxed in that other State.
3 Income or profits from the alienation of
ships or aircraft operated by an enterprise of a Contracting State in
international traffic, or of property (other than real property) pertaining to
the operation of those ships or aircraft, shall be taxable only in that
State.
4 Income or profits derived by a resident of a Contracting State
from the alienation of any shares or other interests in a company, or of an
interest of any kind in a partnership, trust or other entity, where the value of
the assets of such entity, whether they are held directly or indirectly
(including through one or more interposed entities, such as, for example,
through a chain of companies), is principally attributable to real property,
situated in the other Contracting State, may be taxed in that other
State.
5 Nothing in this Agreement affects the application of a law of a
Contracting State relating to the taxation of capital gains derived from the
alienation of any property other than that to which any of the preceding
paragraphs of this Article apply.
1 Income derived by an individual who is a resident of a Contracting
State in respect of professional services or other activities of an independent
character shall be taxable only in that State unless a fixed base is regularly
available to the individual in the other Contracting State for the purpose of
performing the individual’s activities. If such a fixed base is available
to the individual, the income may be taxed in the other State but only so much
of it as is attributable to that fixed base.
2 The term
“professional services” includes services performed in the exercise
of independent scientific, literary, artistic, educational or teaching
activities as well as in the exercise of the independent activities of
physicians, lawyers, engineers, architects, dentists and
accountants.
1 Subject to the provisions of Articles 16, 18 and 19, salaries, wages
and other similar remuneration derived by an individual who is a resident of a
Contracting State in respect of an employment shall be taxable only in that
State unless the employment is exercised in the other Contracting State. If the
employment is so exercised, such remuneration as is derived from that exercise
may be taxed in that other State.
2 Notwithstanding the provisions of
paragraph 1, remuneration derived by an individual who is a resident of a
Contracting State in respect of an employment exercised in the other Contracting
State shall be taxable only in the firstmentioned State if:
(a) the
recipient is present in the other State for a period or periods not exceeding in
the aggregate 183 days in any twelve month period commencing or ending in the
year of income of that other State; and
(b) the remuneration is paid by,
or on behalf of, an employer who is not a resident of that other State;
and
(c) the remuneration is not borne by a permanent establishment or a
fixed base which the employer has in the other State.
3 Notwithstanding
the preceding provisions of this Article, remuneration derived in respect of an
employment exercised aboard a ship or aircraft operated by an enterprise of a
Contracting State in international traffic may be taxed in that
State.
Directors’ fees and other similar payments derived by a resident
of a Contracting State in that person’s capacity as a member of the board
of directors of a company which is a resident of the other Contracting State may
be taxed in that other State.
1 Notwithstanding the provisions of Articles 14 and 15, income derived
by entertainers (such as theatrical, motion picture, radio or television
artistes and musicians) and sportspersons from their personal activities as such
may be taxed in the Contracting State in which these activities are
exercised.
2 Where income in respect of the personal activities of an
entertainer or sportsperson as such accrues not to that person but to another
person, that income may, notwithstanding the provisions of Articles 7, 14 and
15, be taxed in the Contracting State in which the activities of the entertainer
or sportsperson are exercised.
1 Subject to the provisions of paragraph 2 of Article 19, pensions and
annuities paid to a resident of a Contracting State shall be taxable only in
that State.
2 The term “annuity” means a stated sum payable
periodically at stated times during life or during a specified or ascertainable
period of time under an obligation to make the payments in return for adequate
and full consideration in money or money’s worth.
1 Salaries, wages and other similar remuneration, other than a pension
or annuity, paid by a Contracting State, a political subdivision or local
authority of that State to an individual in respect of services rendered in the
discharge of governmental functions shall be taxable only in that State.
However, such salaries, wages and other similar remuneration shall be taxable
only in the other Contracting State if the services are rendered in that other
State and the recipient is a resident of that other State who:
(a) is a
citizen of that State; or
(b) did not become a resident of that State
solely for the purpose of rendering the services.
2 (a) Any pension paid
by, or out of the funds created by, a Contracting State, a political subdivision
or a local authority of that State, to an individual in respect of services
rendered in the discharge of governmental functions shall be taxable only in
that State.
(b) However, that pension shall be taxable only in the other
Contracting State if the individual:
(i) is a resident of, and a citizen
of that State; and
(ii) the services in respect of which that pension is
paid were rendered in that State.
3 The provisions of paragraphs 1 and 2
shall not apply to salaries, wages and other similar remuneration or to pensions
in respect of services rendered in connection with any trade or business carried
on by a Contracting State or a political subdivision or local authority of that
State. In that case, the provisions of Articles 15, 16 or 18, as the case may
be, shall apply.
Where a student, who is a resident of a Contracting State or who was a
resident of that State immediately before visiting the other Contracting State
and who is temporarily present in that other State solely for the purpose of the
student’s education, receives payments from sources outside that other
State for the purpose of the student’s maintenance or education, those
payments shall be exempt from tax in that other State.
1 Items of income of a resident of a Contracting State, wherever
arising, not dealt with in the foregoing Articles of this Agreement shall be
taxable only in that State.
2 The provisions of paragraph 1 shall not
apply to income, other than income from real property as defined in paragraph 2
of Article 6, derived by a resident of a Contracting State where that income is
effectively connected with a permanent establishment or fixed base situated in
the other Contracting State. In that case the provisions of Article 7 or Article
14, as the case may be, shall apply.
3 Notwithstanding the provisions of
paragraphs 1 and 2, items of income of a resident of a Contracting State not
dealt with in the foregoing Articles of this Agreement derived from sources in
the other Contracting State may also be taxed in that other State.
1 Subject to the law of Australia as it may be amended from time to
time (without changing the general principle of this Article), Russian tax paid
under the law of Russia, and in accordance with this Agreement, whether directly
or by deduction in respect of income derived from sources in Russia by a
resident of Australia, shall be allowed as a credit against Australian tax
payable in respect of that income.
2 Subject to the law of Russia as it
may be amended from time to time (without changing the general principle of this
Article), Australian tax paid under the law of Australia, and in accordance with
this Agreement, whether directly or by deduction in respect of income derived
from sources in Australia by a resident of Russia, shall be allowed as a credit
against Russian tax payable in respect of that income.
1 The benefits of this Agreement shall not apply to income or profits
arising from:
(a) activities such as banking, shipping, financing or
insurance, and Internet activities; or
(b) activities such as headquarter
or coordination centre or similar arrangements providing company or group
administration, financing or other support; or
(c) activities which give
rise to passive income, such as dividends, interest and royalties;
or
(d) other activities the performance of which do not require
substantial presence in the State of source,
where, under the laws or
administrative practices of a Contracting State, such income or profits are
preferentially taxed and, in relation thereto, information is accorded
confidential treatment beyond the usual or general protection of information
accorded for tax purposes under the laws or administrative practices of that
State.
2 For the purposes of paragraph 1, income or profits are
preferentially taxed in a Contracting State if, other than by reason of the
preceding Articles of this Agreement, an amount of income or
profits:
(a) is exempt from tax; or
(b) is included in taxable
income of a taxpayer but that amount is subject to a rate of tax that is lower
than the rate applicable to an equivalent amount that is included in the tax
base of similar taxpayers who are residents of that State; or
(c) a
credit, rebate or other concession or benefit is provided directly or indirectly
in relation to that income or profits, other than a credit for foreign tax
paid.
1 Where a person considers that the actions of one or both of the
Contracting States result or will result for the person in taxation not in
accordance with this Agreement, the person may, irrespective of the remedies
provided by the domestic law of those States concerning taxes to which this
Agreement applies, present a case to the competent authority of the Contracting
State of which the person is a resident. The case must be presented within 3
years from the first notification of the action resulting in taxation not in
accordance with this Agreement.
2 The competent authority shall
endeavour, if the claim appears to it to be justified and if it is not itself
able to arrive at a satisfactory solution, to resolve the case with the
competent authority of the other Contracting State, with a view to the avoidance
of taxation which is not in accordance with this Agreement. The solution so
reached shall be implemented notwithstanding any time limits in the domestic law
of the Contracting States.
3 The competent authorities of the Contracting
States shall jointly endeavour to resolve any difficulties or doubts arising as
to the interpretation or application of this Agreement. They may also consult
together for the avoidance of double taxation in cases not provided for in this
Agreement.
4 The competent authorities of the Contracting States may
communicate with each other directly for the purpose of giving effect to the
provisions of this Agreement.
1 The competent authorities of the Contracting States shall exchange
such information as is necessary for carrying out the provisions of this
Agreement or of the domestic law of the Contracting States concerning taxes to
which this Agreement applies insofar as the taxation under that law is not
contrary to this Agreement. The exchange of information is not restricted by
Article 1. Any information received by a Contracting State shall be treated as
confidential in the same manner as information obtained under the domestic law
of that State and shall be disclosed only to persons or authorities (including
courts and administrative bodies) concerned with the assessment or collection
of, the enforcement or prosecution in respect of, or the determination of
appeals in relation to, the taxes to which this Agreement applies. Such persons
or authorities shall use the information only for such purposes. They may
disclose the information in public court proceedings or in judicial
decisions.
2 In no case shall the provisions of paragraph 1 be construed
so as to impose on a Contracting State the obligation:
(a) to carry out
administrative measures at variance with the law or the administrative practice
of that or of the other Contracting State; or
(b) to supply information
which is not obtainable under the law or in the normal course of the
administration of that or of the other Contracting State; or
(c) to
supply information which would disclose any trade, business, industrial,
commercial or professional secret or trade process, or to supply information the
disclosure of which would be contrary to public policy.
Nothing in this Agreement shall affect the fiscal privileges of members
of diplomatic missions and consular officials under the rules of general
international law or under the provisions of special international
agreements.
Both Contracting States shall notify each other in writing through the
diplomatic channel of the completion of their respective procedures required for
the entry into force of this Agreement. This Agreement shall enter into force on
the date of the last notification, and thereupon the provisions of this
Agreement shall have effect:
(a) in Australia:
(i) in respect of
withholding tax on income that is derived by a nonresident, in relation to
income derived on or after 1 July in the calendar year next following that
in which the Agreement enters into force;
(ii) in respect of other
Australian tax, in relation to income or profits of any year of income beginning
on or after 1 July in the calendar year next following that in which the
Agreement enters into force;
(b) in Russia:
for taxable years and
periods beginning on or after 1 January in the calendar year next following
that in which the Agreement enters into force.
This Agreement shall continue in effect indefinitely, but either of the
Contracting States may, on or before 30 June in any calendar year beginning
after the expiration of 5 years from the date of its entry into force, give to
the other Contracting State through the diplomatic channel written notice of
termination and, in that event, the provisions of the Agreement shall cease to
be effective:
(a) in Australia:
(i) in respect of withholding tax
on income that is derived by a nonresident, in relation to income derived on or
after 1 July in the calendar year next following that in which the notice
of termination is given;
(ii) in respect of other Australian tax, in
relation to income or profits of any year of income beginning on or after
1 July in the calendar year next following that in which the notice of
termination is given;
(b) in Russia:
for taxable years and periods
beginning on or after 1 January in the calendar year next following that in
which the notice of termination is given.
IN WITNESS WHEREOF the
undersigned, duly authorised thereto by their respective Governments, have
signed this Agreement.
DONE at Canberra, on 7 September 2000, in
duplicate, each in the English and Russian languages, both texts being equally
authentic.
FOR THE GOVERNMENT OF FOR THE GOVERNMENT
OF
AUSTRALIA: THE RUSSIAN FEDERATION:
ROD KEMP SERGEI
SHATALOV
[Signatures omitted]
THE GOVERNMENT OF AUSTRALIA AND THE GOVERNMENT OF THE RUSSIAN
FEDERATION,
HAVING REGARD to the Agreement between the Government of
Australia and the Government of Russian Federation for the avoidance of double
taxation and the prevention of fiscal evasion with respect to taxes on income
signed today at Canberra (in this Protocol called “the
Agreement”),
HAVE AGREED on the following, which shall form an
integral part of the Agreement:
1 With respect to the Agreement as a
whole (including this Protocol):
(a) income or profits derived by a
resident of a Contracting State which, under at least one of Articles 6 to 8, 10
to 17 and 19, may be taxed in the other Contracting State shall, for the
purposes of Article 22 and of the income tax laws of the respective Contracting
States, be deemed to be income from sources in that other State;
and
(b) the terms “income” and “profits” shall,
in the case of Australia, include capital gains.
2 With respect to
Articles 13 and 15:
the term “international traffic” shall
not include any transportation which commences at a place in a Contracting State
and returns to that place, after travelling through international waters, but
not visiting another State (including, but not limited to, the other Contracting
State) or Territory (other than a Territory of the firstmentioned Contracting
State).
3 With respect to Article 3:
nothing in
subparagraph (b) of paragraph 1 of Article 3 is intended to vary the effect
as between the Contracting States of paragraph 2 of Article IV of the Antarctic
Treaty done at Washington on 1 December 1959.
4 With respect to
Article 5:
the principles set forth in Article 5 shall be applied in
determining for the purposes of paragraph 5 of Article 11 and paragraph 5 of
Article 12 whether there is a permanent establishment outside both Contracting
States, and whether an enterprise, not being an enterprise of a Contracting
State, has a permanent establishment in a Contracting State.
5 With
respect to Article 7:
(a) nothing in Article 7 shall affect the
application of any law of a Contracting State relating to the determination of
the tax liability of a person, including where the information available to the
competent authority of that State is inadequate to determine the profits to be
attributed to a permanent establishment, provided that that law shall be
applied, so far as it is practicable to do so, consistently with the principles
of this Article. For the purposes of this paragraph, “competent
authority” for Russia includes the Ministry of Taxes and
Duties;
(b) nothing in Article 7 shall affect the application of any law
of a Contracting State relating to tax imposed on profits from insurance
contracts entered into with nonresidents provided that if the relevant law in
force in either Contracting State at the date of signature of this Agreement is
varied (otherwise than in minor respects so as not to affect its general
character) the Contracting States shall consult each other with a view to
agreeing to any amendment of this paragraph that may be appropriate;
and
(c) where:
(i) a resident of a Contracting State is beneficially entitled, whether
directly or through one or more interposed trust estates, to a share of the
business profits of an enterprise carried on in the other Contracting State by
the trustee of a trust estate other than a trust estate which is treated as a
company for tax purposes; and
(ii) in relation to that enterprise, that
trustee would, in accordance with the principles of Article 5, have a permanent
establishment in that other
State,
the
enterprise carried on by the trustee shall be deemed to be a business carried on
in the other State by that resident through a permanent establishment situated
in that other State and that share of business profits shall be attributed to
that permanent establishment.
6 With respect to Article 8:
the
expression “profits derived from ship or aircraft operations confined
solely to places in that other State” includes profits derived from the
carriage by ships or aircraft of passengers, livestock, mail, goods or
merchandise which are shipped in a Contracting State and are discharged at a
place in that State.
7 With respect to Article 9:
(a) it is
understood that a Contracting State that is being asked to grant relief in
respect of an adjustment made by the other Contracting State is not compelled to
make an adjustment simply because the other State has increased the amount of
profits subject to tax but is entitled to satisfy itself that the adjustment
made by that other State really produces an outcome in conformity with
internationally accepted principles for transfer pricing adjustments before
granting any relief; and
(b) for the purposes of paragraph 2 of this
Article, “competent authority” for Russia includes the Ministry of
Taxes and Duties.
8 With respect to Article 10:
without limiting
any other provision of this Agreement regarding notification and consultation on
changes to the taxation systems of the Contracting States, if the relevant law
in either Contracting State at the date of signature of this Agreement is
varied, otherwise than in minor respects so as not to affect its general
character, the Contracting States shall consult each other with a view to
agreeing to any amendment of paragraph 2 that may be appropriate.
IN
WITNESS WHEREOF the undersigned, duly authorised thereto, have signed this
Protocol.
DONE at Canberra, on 7 September 2000, in duplicate,
each in the English and Russian languages, both texts being equally
authentic.
FOR THE GOVERNMENT OF FOR THE GOVERNMENT
OF
AUSTRALIA: THE RUSSIAN FEDERATION:
ROD KEMP SERGEI
SHATALOV
[Signatures omitted]