AICC welcomes Double Taxation Agreement with Israel
Leon Kempler, Chairman, Australia-Israel Chamber of Commerce has congratulated the Federal Government on announcing their intention to commence negotiations on a new Double Taxation Agreement between Australia and Israel.
He said: “This is an important legacy from former Prime Minister Tony Abbott, former Treasurer Joe Hockey and new Cabinet minister Josh Frydenberg.”
Mr Kempler said a Double Tax Treaty (DTT) between Israel and Australia had the potential to reap multiple benefits for Australia as it would accelerate knowledge transfer.
Tax treaties function to prevent double taxation. A tax treaty between Australia and Israel would therefore guarantee that Australian and Israeli companies doing business in both jurisdictions will not be double taxed on the same income.
“This will occur by removing the barriers and competitive disadvantages currently suffered by Australian business in building major global enterprises built on collaboration with world leaders drawn from the Israeli economy in innovation and technology across a wide range of industries, including health, energy, water, food, IT and cybersecurity,” Mr Kempler said.
“Much of the groundwork to achieve this acceleration has been done through trade missions in each direction, through the establishment of collaboration between many of the universities of each country and through business activity and bases in each country. Realising the benefits for Australia of this groundwork and the available opportunities will be significantly enhanced if a DTT is put in place.”
“I congratulate Mr Hockey on being a man of his word, as he confirmed in April to a major Australia-Israel Chamber of Commerce luncheon address that government moves towards implementing a tax treaty between Australia and Israel were being accelerated.”
Many companies (such as Google, Facebook, HP, Intel, Motorola, IBM, Cisco, Berkshire Hathaway, Huawei, Toshiba, Samsung, Rakuten and many others) that reside in countries in which Israel has DTTs have been particularly successful in accessing Israel’s significant R&D and high-tech capability through M&A activity, IP licensing arrangements and R&D joint venture arrangements. These DTT countries
Mr Kempler said a Double Tax Treaty (DTT) between Israel and Australia had the potential to reap multiple benefits for Australia as it would accelerate knowledge transfer.
represent Australia’s key trading and strategic partners including USA, China, Japan, UK and India.
The benefits of a DTT include:
- – Accelerating Australia’s high-tech capability, leveraging off Israel’s globalleadership position;
- – Removing Australia’s competitive disadvantage relative to the likes of theUnited States, Canada, France, Germany and the UK, who have DTTs in placewith Israel;
- – Removing Australia’s competitive disadvantage relative to our major Asiantrading partners such as China, India, Japan, Korea and Singapore, who alsohave DTTs in place with Israel;
- – Enabling Australia to put its first Middle Eastern DTT in place;
- – Helping enhance Australia’s economy and its global competitiveness.Australia and Israel currently have tax treaties with about 50 countries each, which are based on the Model Tax Convention of the Organisation for Economic Cooperation and Development (OECD).The Israel Tax Authority (ITO) has been behind legislation aimed at combating treaty shopping, which is said to exist if a resident of a particular country takes steps to establish a company or any other connection to another country with the aim of obtaining entitlement to benefits or relief under its law and tax treaties that the other country is party to.
“The AICC believes that the implementation of a DTT with Israel provides Australia with a unique opportunity to significantly increase trade and investment between our two countries,” Mr Kempler added. “Israel represents an ideal start for Australia to expand its DTT network in the Middle East given the stability and maturity of its tax and financial systems.”
