Explanatory Statement
Consular Privileges and Immunities (Indirect Tax Concession Scheme) Amendment (Albania and Lithuania) Determination 2022
Issued by the Authority of the Minister for Foreign Affairs (the Minister)
Subject: Consular Privileges and Immunities Act 1972
Consular Privileges and Immunities (Indirect Tax Concession Scheme) Amendment (Albania and Lithuania) Determination 2022 (“Amendment”).
Section 10A of the Consular Privileges and Immunities Act 1972 provides that the Minister may make Determinations for the Commissioner of Taxation to pay the head of a consular post (or a person in a class of persons determined by the Minister) an amount equal to the indirect tax payable (if any) in respect of an acquisition covered by the Minister’s Determination.
The purpose of the Amendment is to amend the Consular Privileges and Immunities (Indirect Tax Concession Scheme) Determination 2000 (“Determination”) to create a new Indirect Tax Concession Scheme (ITCS) package for Albania and Lithuania by providing indirect tax concessions to their respective consular posts in Australia and staff accredited to those posts. The effect of the Amendment is to add new and updated items to Schedule 1 of the Determination, which lists the ITCS packages available to particular consular posts.
Consular posts and accredited staff are exempt from paying direct taxes under the Vienna Convention on Consular Relations 1963 (Articles 32, 49, 60 and 66). In line with international practice, indirect tax concessions are also extended to consular posts and accredited staff. In Australia, indirect tax concessions are provided for under the ITCS. Individual packages are negotiated with each country, and the level of concessions provided is broadly based on reciprocity.
Commencement dates for individual packages form part of the negotiations for tax concessions. In some cases, the commencement date reflects the date when the agreement was reached. In other cases, the commencement date allows access to concessions for purchases of goods and services already made, including by our overseas missions and posts. As concession packages are usually agreed before they come into force under Australian legislation, they need to be made retrospective. This retrospectivity is not to the detriment of any person or organisation; rather it extends concessions to posts and accredited staff from either the date the post opened or a date agreed during negotiations. Reciprocity in terms of the date of effect means that relevant Australian consular posts overseas will also have access to the same or similar benefits in the relevant overseas country.
The ITCS, and its extension to new or existing consular posts in Australia by way of periodic amendments to Schedule 1 of the Determination (such as this Amendment), are beneficial to Australia. In determining the scope of the economic benefit to Australia, in 1999 the then Assistant Treasurer, Mr Rod Kemp, advised that the estimated net benefit to Australia in pursuing reciprocal agreements under the ITCS would be several million dollars, and that the most practical means of assessing the financial benefit to Australia would be to take a global approach, rather than an approach based on individual agreements. In the current instance, Treasury has advised the concessions covered by the Amendment will have a negligible impact on revenue. In addition, the provision of tax concessions encourages consular posts and accredited staff to purchase goods in Australia rather than directly importing them, which further assists the Australian economy.
The Office of Best Practice Regulation has confirmed that amendments to Schedule 1 of the Determination are not expected to have regulatory impacts on business, individuals or community organisations, and do not require the preparation of a Regulation Impact Statement.
The Amendment does not alter the way the ITCS works, but extends tax concessions to specific consular posts. The Amendment was therefore judged to be of a minor nature where consultation is unnecessary under the Legislation Act 2003.
The Amendment is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview
The Consular Privileges and Immunities (Indirect Tax Concession Scheme) Amendment (Albania and Lithuania) Determination 2022, issued under the authority of the Minister for Foreign Affairs, amends the existing Indirect Tax Concession Scheme (ITCS) to create new packages for Albania and Lithuania. This amendment responds to the need for equitable indirect tax concessions for consular posts and accredited staff in Australia, in line with international practice and reciprocity agreements. The determination updates Schedule 1 of the existing determination to include these new packages, extending tax concessions to the specified consular posts and their staff. This measure is expected to have a negligible impact on revenue, while fostering economic benefits for Australia by encouraging local purchases over direct imports. The amendment was determined to be of a minor nature, thus not requiring consultation, and is compatible with human rights and freedoms as recognised in international instruments.
Scope and Application
The Consular Privileges and Immunities (Indirect Tax Concession Scheme) Amendment (Albania and Lithuania) Determination 2022 applies to the consular posts of Albania and Lithuania in Australia, as well as their accredited staff, by extending indirect tax concessions under the existing Indirect Tax Concession Scheme (ITCS). The ITCS is governed by the Consular Privileges and Immunities Act 1972, which allows the Minister for Foreign Affairs to create new tax concession packages for specific countries. This Amendment modifies the original 2000 Determination to include these two nations, reflecting a reciprocal agreement that aims to provide similar benefits to Australian consular posts in those countries. The geographic reach of the Amendment is limited to Australia, focusing on the consular activities within its jurisdiction. It is important to note that this Amendment does not introduce any new principles or alter the fundamental operation of the ITCS, but rather it adds to the existing concessions available under the scheme. The application of the Amendment is retrospective to a date agreed upon during negotiations, facilitating immediate access to concessions for purchases already made by the respective consular posts and their staff.
Key Provisions
The Consular Privileges and Immunities (Indirect Tax Concession Scheme) Amendment (Albania and Lithuania) Determination 2022 introduces amendments to the existing Indirect Tax Concession Scheme (ITCS) under the Consular Privileges and Immunities Act 1972 (section 10A). This amendment introduces a new ITCS package for Albania and Lithuania, providing indirect tax concessions to their respective consular posts in Australia and their accredited staff. The main change is the addition of new and updated items to Schedule 1 of the Determination, which lists the ITCS packages available to particular consular posts. The purpose of these amendments is to extend the existing tax concessions to the new consular posts, aligning with international practice and reciprocity agreements.
The obligations imposed by this Act primarily concern the Minister for Foreign Affairs, who has the authority to make Determinations under section 10A of the Consular Privileges and Immunities Act 1972. The Minister is required to ensure that the Commissioner of Taxation pays the head of a consular post, or a person in a class of persons determined by the Minister, an amount equal to the indirect tax payable in respect of an acquisition covered by the Minister’s Determination. This ensures that the tax concessions are applied correctly and that the respective consular posts and their accredited staff are exempt from indirect taxes as stipulated in the Vienna Convention on Consular Relations 1963. The reciprocal nature of these concessions means that Australian consular posts will also benefit from similar tax concessions in Albania and Lithuania.
Under the Consular Privileges and Immunities Act 1972, there are specific offences and penalties for breaches of the tax concessions outlined in the Determination. However, the Amendment itself does not introduce new offences or penalties; it merely extends existing provisions. Any breach of the tax concessions or obligations could lead to legal consequences, but these are governed by the broader tax laws and international agreements rather than the specific provisions of this Amendment. The primary impact of non-compliance would be the loss of the tax concessions, resulting in a financial burden on the consular posts and their accredited staff.
The Amendment, which extends the ITCS to Albania and Lithuania, is considered a minor amendment under the Legislation Act 2003 and does not require consultation. Moreover, it is compatible with human rights and freedoms as recognised in international instruments, as confirmed by the Office of Best Practice Regulation. The economic benefits of these concessions are considered negligible in terms of revenue impact but are seen as beneficial for encouraging local purchases and supporting the Australian economy. Additionally, these amendments do not have regulatory impacts on businesses, individuals, or community organisations and do not require the preparation of a Regulation Impact Statement.