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Foreign source income taxation: country listings.



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ASSISTANT TREASURER

NO.045

Foreign Source Income Taxation - Country Listings

The Assistant Treasurer, Senator Rod Kemp, has approved the inclusion of a number of new countries on the Limited Exemption List of countries, contained within Schedule 10 of the Regulations to the Income Tax Assessment Act 1936, from which non-portfolio dividends and branch profits remitted to Australia are exempted from Australian company tax.

A general presumption in the tax law is that the foreign earnings of Australian companies will be taxed at Australia’s corporate tax rate, but allowing a credit for any foreign tax paid on those earnings. The effect of including countries on the Limited Exemption List is to exempt non-portfolio dividends and branch profits paid from those countries to Australian companies from Australian company tax. This is done on the presumption that these payments will already have incurred foreign tax on a basis and at a level broadly comparable to Australia’s company tax. In these circumstances, there is little point in requiring companies to incur the administrative expense involved in having these forms of income remitted to Australia under the Foreign Tax Credit System, since no or very little additional Australian tax would be payable.

The countries I have approved for listing are:

Argentina ● Iran ● South Africa ● The Slovak Republic ●

All of these countries tax on bases broadly comparable to Australia.

Necessary amendments to the Regulations, giving effect to these listings, will be promulgated as soon as possible. All listings will be deemed to have occurred from today.

8 September 2000 MELBOURNE

Media contacts: Richard Allsop Assistant Treasurer’s Office (03) 9650 7274 Murray Edwards Treasury (02) 6263 4480

 

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