2. Bilateral Investment Agreements and Taxation Treaties
Australia is a party to bilateral investment treaties with Argentina, China, Czech Republic, Egypt, Hong Kong, Hungary, India, Indonesia, Laos, Lithuania, Mexico, Pakistan, Papua New Guinea, Peru, Philippines, Poland, Romania, Sri Lanka, Turkey, Uruguay and Vietnam.
In addition to the AUSFTA free trade agreement (FTA) with the United States, Australia has bilateral FTAs in force with Chile, China, Japan, Korea, Malaysia, Singapore, and Thailand, and a multilateral FTA with New Zealand and the countries of the Association of Southeast Asian States (ASEAN), all of which contain chapters on investment. Australia signed the Comprehensive and Progressive Agreement for Trans Pacific Partnership (CPTPP) in March 2018, and it entered into force in December 2018. Australia has signed, but not yet ratified, bilateral FTAs with Hong Kong, Indonesia, and Peru, and the multilateral Pacific trade and economic agreement known as“PACER Plus”.
Australia is currently engaged in bilateral FTA negotiations with the EU and India, and in the following plurilateral FTA negotiations: the Regional Comprehensive Economic Partnership (RCEP, consisting of the ASEAN + Six group of nations); the Gulf Cooperation Council (GCC); and the Pacific Alliance (comprising Chile, Peru, Mexico and Colombia.
The U.S.-Australia Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes has been in place since 1982, with amendments made in 2001. In addition to the United States, Australia has income tax treaties with 44 other countries and Taiwan.
In 2014, Australia signed an Intergovernmental Agreement with the United States to implement the Foreign Account Tax Compliance Act (FATCA) and improve tax cooperation. Under FATCA, Australian financial institutions are required to submit information on accounts held by U.S. citizens. The Intergovernmental Agreement allows financial institutions to report the information via the Australian Tax Office under the existing Australia–US tax treaty arrangements.
The Australian government has moved aggressively in efforts to fight tax avoidance schemes by multinational corporations. Australia ratified the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting in September 2018, and it entered into force on January 1, 2019. Australia has used this instrument to modify its tax treaties with several countries, but not with the United States. Australia has actively participated in the OECD Base Erosion Profit Shifting (BEPS) recommendations but has also moved further than the BEPS recommendations. Multinational anti-avoidance legislation targets companies that do business in Australia without establishing a permanent establishment, and Australia’s diverted profits tax legislation targets tax schemes that recognize income in lower tax jurisdictions. Australia has implemented the OECD’s hybrid mismatch rules (as of January 2019) and limits interest deductions through a Safe Harbor Debt Limit of 60 percent (further legislation dealing with thin capitalization is before parliament at the time of writing.).
10. Political and Security Environment
Political protests (e.g., rallies, demonstrations, marches, public conflicts between competing interests) form an integral, though generally minor, part of Australian cultural life. Such protests rarely degenerate into violence.
13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
*Australian Bureau of Statistics, based on most recently available data. Year-end foreign investment data is published in May of the following year.
Table 3: Sources and Destination of FDI
|Direct Investment from/in Counterpart Economy Data|
|From Top Five Sources/To Top Five Destinations (US Dollars, Billions)|
|Inward Direct Investment||Outward Direct Investment|
|Total Inward||662.3||100%||Total Outward||460.6||100%|
|China||31.7||5%||Papua New Guinea||12.8||3%|
|“0” reflects amounts rounded to +/- USD 500,000.|
Table 4: Sources of Portfolio Investment
|Portfolio Investment Assets|
|Top Five Partners (Millions, US Dollars)|
|Total||Equity Securities||Total Debt Securities|
|All Countries||$808,049||100%||All Countries||$515,382||100%||All Countries||$292,667||100%|
|United States||$335,258||41%||United States||$237,834||46%||United States||$97,424||33%|
|United Kingdom||$71,863||9%||United Kingdom||$44,153||9%||United Kingdom||$27,710||9%|