Israel and Australia Signed a Double Tax Treaty

A double taxation treaty was signed between Israel and Australia in the end of March 2019, after years of prolonged negotiations, expectations, and wonder about the obstacles.

Australia was one of the few developed countries that had not yet signed a double taxation treaty with Israel to facilitate cross-border business between the two countries. Despite the fact that Australia and Israel maintain extensive business, political, economic, and security relations, the tax issue remained unresolved, which forced many individuals and corporations from both countries to live with the risk of paying double taxes.

The treaty is built according to the model and recommendations of the Organization for Economic Cooperation and Development (OECD), of which Israel has been a member since 2010.

The treaty provides a solution not only for double taxation, but also prescribes reduced tax rates for dividends (0–15%), interest (0–10%), royalties at the tax rate of 5%, etc., all for the purpose of encouraging investments between the two countries. The signing of this treaty will undoubtedly expand the volume of trade between Israel and Australia, which currently exceeds USD 1 billion.

The treaty will take effect following both countries’ completion of all internal ratification proceedings. If these proceedings are completed by the end of 2019, the double tax treaty is expected to come into effect on January 1, 2020.