Chile And Australia To Sign DTA

by Mary Swire, Tax-News.com, Hong Kong

25 January 2010

Australia’s Assistant Treasurer, Nick Sherry, has announced that Australia and Chile have reached agreement in principle on a new bilateral double taxation agreement (DTA).

The proposed DTA is based on the Organization for Economic Cooperation and Development's (OECD's) model tax convention. Its successful conclusion follows recent changes to Chile's domestic law to enable Chile to exchange banking information under DTAs in accordance with international best practice.

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.

"Chile is a key economic and trading partner for Australia in the growing South American market, with two-way trade now worth over AUD1.28bn (USD1.15bn)," Sherry said. "Chile is also a major destination for Australian investment in South America, especially in the mining sector."

"The new treaty will extend Australia's tax treaty network in South America and reduce taxation barriers to trade and investment between the countries – it's a great step forward for Australian businesses that this tax treaty has been negotiated," he added. "The treaty will help maintain the integrity of Australia's tax base by allowing the exchange of taxpayer information, including bank information, between Australian and Chilean tax administrations."

"This historic, new tax treaty will facilitate the ongoing expansion of trans-Pacific trade and investment flows between the two countries and will provide long-term benefits to Australian business interests in Chile."

After the governments of the two countries have completed the necessary procedures, the proposed treaty will be signed and submitted to the respective parliaments. It will enter into force after approval by the parliaments and an official exchange of notes.

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