Explanatory Statement
Consular Privileges and Immunities (Indirect Tax Concession Scheme) Amendment (Panama and Portugal) Determination 2020
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 (Panama and Portugal) Determination 2020 (“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 Panama and an upgraded ITCS package for Portugal 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 (Panama and Portugal) Determination 2020 was issued under the authority of the Minister for Foreign Affairs, pursuant to the Consular Privileges and Immunities Act 1972. This Amendment serves to create a new Indirect Tax Concession Scheme (ITCS) package for Panama and an upgraded ITCS package for Portugal. The primary objective of the Amendment is to provide indirect tax concessions to the respective consular posts of these countries in Australia and their accredited staff. This extension of tax concessions aligns with international practices and reciprocity principles, thereby ensuring that consular posts and accredited staff benefit from similar privileges in their home countries. The Amendment introduces these changes by updating Schedule 1 of the existing Determination, which lists the available ITCS packages for different consular posts. Treasury has indicated that the concessions will have a negligible impact on revenue, and the provision of these concessions encourages the purchase of goods and services within Australia, thereby supporting the local economy. The Office of Best Practice Regulation has confirmed that these amendments do not require the preparation of a Regulation Impact Statement and are not expected to impose regulatory impacts on business, individuals, or community organisations.
Scope and Application
The Consular Privileges and Immunities (Indirect Tax Concession Scheme) Amendment (Panama and Portugal) Determination 2020 applies to the consular posts of Panama and Portugal in Australia, as well as their accredited staff. This Amendment extends the Indirect Tax Concession Scheme (ITCS) to these posts and staff, providing them with concessions on indirect taxes for certain acquisitions. The ITCS operates under the Consular Privileges and Immunities Act 1972, where the Minister for Foreign Affairs can determine tax concessions for consular posts. The concessions are based on reciprocity and are negotiated individually with each country. This Amendment adds and updates the tax packages for Panama and Portugal in the schedule of the 2000 Determination, effectively extending the tax concessions to these countries. The concessions do not negatively impact any person or organisation but rather extend benefits to the consular posts and their staff from either the date the post opened or a date agreed upon during negotiations. The scheme is designed to encourage purchases within Australia, benefiting the local economy.
Key Provisions
The main operative sections of the Consular Privileges and Immunities (Indirect Tax Concession Scheme) Amendment (Panama and Portugal) Determination 2020 (F2021L00553) are contained within the Amendment itself, which updates the existing Indirect Tax Concession Scheme (ITCS) to include new and upgraded packages for Panama and Portugal. This Amendment is made under the authority of the Minister for Foreign Affairs pursuant to section 10A of the Consular Privileges and Immunities Act 1972 (section 10A). The Amendment involves the insertion of new and revised entries into Schedule 1 of the Consular Privileges and Immunities (Indirect Tax Concession Scheme) Determination 2000 (section 1). These entries detail the indirect tax concessions available to the consular posts of Panama and Portugal in Australia, as well as to their accredited staff.
This Amendment imposes specific obligations on the Commissioner of Taxation, who is required 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 in respect of acquisitions covered by the Minister’s Determination. The indirect tax concessions are intended to mirror the exemptions from direct taxes provided under the Vienna Convention on Consular Relations 1963 (Articles 32, 49, 60 and 66) and are based on reciprocity. The concessions are detailed in the updated Schedule 1 of the Determination. The Concession Scheme is designed to ensure that consular posts and their accredited staff in Australia benefit from similar indirect tax treatments as Australian consular posts and staff abroad.
The Amendment itself does not explicitly create new offences or penalties; however, any breaches of the existing provisions within the Consular Privileges and Immunities Act 1972 or the Determination could result in legal consequences. The original Act and Determination outline various provisions for the application of consular privileges and immunities, including tax concessions, and failure to comply with these could lead to civil or criminal penalties. For example, section 10 of the Act deals with the protection of property and interests of consular posts and their accredited staff, while section 11 addresses the immunity from legal process. The Determination provides specific details on how the ITCS operates, including the scope of the indirect tax concessions. It is important for the Commissioner of Taxation and other relevant parties to adhere to these provisions to avoid any potential legal repercussions.
In summary, the Amendment updates the ITCS to include new and enhanced indirect tax concession packages for Panama and Portugal, extending the existing framework to cover these countries. It requires the Commissioner of Taxation to make payments to the heads of these consular posts or their designated representatives, aligning with international practices and reciprocity principles. While the Amendment itself does not introduce new offences or penalties, adherence to the existing provisions is crucial to avoid any legal consequences that may arise from non-compliance. The economic benefits of these concessions are considered minimal in terms of revenue impact, but they contribute positively to Australia’s economy by encouraging purchases within the country rather than direct imports.