New taxation agreement between Finland and Australia signed
Eero Heinäluoma, the Finnish Minister of Finance, and Peter Costello, Treasurer of the Commonwealth of Australia, signed a new taxation agreement between Finland and Australia on Monday 20 November, 2006. The agreement will eliminate the obstacles to investment resulting from international double taxation and, more generally, remove barriers to the building of economic relations between the two countries.
According to Eero Heinäluoma, the agreement will make trade and other contacts between the two countries easier and bring benefits to businesses and ordinary citizens. He adds that the preparation of the agreement was fairly protracted.
With certain exceptions, the agreement is structured on the model drawn up by the Organisation for Economic Cooperation and Development (OECD). It says that a state has the right to tax income but that the other contracting state must correspondingly either relinquish its right to impose a tax based on its own taxation legislation or grant tax relief in other ways. This prevents international double taxation. The agreement also contains provisions on the exchange of taxation information and on a ban on discrimination.
Until now, Finland and Australia have observed an income taxation agreement signed between the two countries in 1984, which was updated with a protocol in 1997. Developments in the field of avoiding double taxation have, however, rendered the agreement outdated. Moreover, both countries have introduced major changes to their taxation legislation since the signing of the agreement and the amendment protocol.
The agreement will require the approval of the Finnish Parliament to bring it into force.
For more information, please contact:
Mr Antero Toivainen, Financial Counsellor, tel. +358 9 160 33167