Fed: New tax treaty with UK to boost investment and trade
CANBERRA, Aug 21 AAP - Aussie firms will find it easier to bring profits home fromthe United Kingdom and borrow money from UK lenders under a new tax treaty signed today.
Treasurer Peter Costello said many Australian companies used the UK as a base for operationsin Europe, and many UK companies used Australia as a regional headquarters for Asia.
He said the updated treaty on double taxation would improve trade and investment flowsbetween the two countries and benefit the whole economy.
"To the extent that it increases two-way trade and investment, we believe it will havean overall economic benefit," Mr Costello said.
Mr Costello said the greatest bonus would be for Australian companies earning largeamounts of income from the UK, and wanting to repatriate that income.
"Some of them are earning more revenue outside Australia than they are in it," he said.
"I should observe not every Australian company has done well in the UK, as we know,but for many Australian companies it's been a wonderful base."
Financial services group AMP yesterday unveiled a record half-year loss of $2.16 billion,largely because of writedowns and costs from plans to demerge its Australasian and UKoperations.
Other Australian firms with substantial interests in the UK include BHP Billiton, RioTinto, Brambles, National Australia Bank, Fosters and the Spotless group.
The agreement will make it cheaper to borrow funds from the UK and reduce hurdles forAustralian banks lending offshore, and reduce the cost for Australian companies usingintellectual property owned offshore.
It will also reduce the tax on royalties earned by Australian companies from music,film and television series used in the UK and make it more attractive to promote Australiancompanies overseas.
Tax on dividends from UK companies based in Australia will also fall, making Australiaa more attractive investment destination.
AAP kmh/sb/apm/de
KEYWORD: TAX UK
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