New tax treaty for Australia and Chile
Australia and Chile will look to develop a new tax treaty after signing an in-principle agreement to encourage trade and investment and to allow the exchange of taxpayer information. The treaty is the first of its kind signed between the countries. The Federal Government hopes the move will reduce tax evasion.
“The proposed treaty establishes an internationally accepted framework for the taxation of cross-border transactions which will also reduce investor risk by providing a degree of legal and fiscal certainty,” said assistant Treasurer Nick Sherry.
Previously, a treaty of thus nature was not possible due to Chile’s laws, but a recent change in legislation means banking information may now be exchanged.
As Chile is a major destination for Australian investment in South America, the tax treaty would assist tax-related transparency, extend Australia’s tax treaty network in South America, and reduce taxation barriers to bilateral trade and investment.
The agreement is based on the Organisation for Economic Cooperation and Development’s Model Tax Convention, with some variations.