Consular Privileges and Immunities (Indirect Tax Concession Scheme) Amendment (Saudi Arabia) Determination 2023

Administered by Department of Foreign Affairs and Trade

Legislation au F2023L00556 Not in force Legislative Instrument

Legislation content

EXPLANATORY STATEMENT

 

 

Issued by the Authority of the Minister for Foreign Affairs (the Minister)

 

Consular Privileges and Immunities Act 1972

 

Consular Privileges and Immunities (Indirect Tax Concession Scheme)
Amendment (Saudi Arabia) Determination 2023 (the Amendment)

 

 

Legislative Authority

Section 10A of the Consular Privileges and Immunities Act 1972 (the Act) 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 Consular Privileges and Immunities (Indirect Tax Concession Scheme) Determination 2000 (the Determination), determines acquisitions and persons for the purpose of section 10A of the Act.

 

Purpose

The purpose of the Amendment is to amend the Determination to create a new Indirect Tax Concession Scheme (ITCS) package for Saudi Arabia by providing indirect tax concessions to its consular posts in Australia and accredited staff.  The effect of the Amendment is to add 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 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, the Department of Treasury confirmed 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 non-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 Impact Analysis 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 an Impact Statement.

 

Consultation

The Department of Treasury was consulted in relation to this Amendment.

 

Consultation via diplomatic correspondence took place with the Embassy and Consulate-General of Saudi Arabia in Australia in relation to each package of tax concessions. This consultation was straightforward and uncontroversial as concessions were based on clear guidelines and reciprocity for Australian officials. To the extent that issues may arise during consultations of this nature, it is longstanding policy of the Department of Foreign Affairs not to make public the detail of bilateral discussions and negotiations with foreign governments.

 

Further consultation was considered to be unnecessary, as the Amendment does not alter the way the ITCS works, but extends tax concessions to specific consular posts. 

 

Exemption from Sunsetting

The Amendment and the Determination are exempt from sunsetting by virtue of section 11 table item 1 of the Legislation Exemption and Other Matters Regulation 2015, which exempts “An instrument the sole purpose of which, or a primary purpose of which, is to give effect to an international obligation of Australia”. The giving of effect to international obligations has long been recognised as justification for exemption from sunsetting. These instruments implement an agreement between the Australian Government and the Government of Saudi Arabia as to the privileges and immunities to be accorded to Saudi Arabian officials.

 

Statement of Compatibility with Human Rights

This Disallowable Legislative Instrument 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. The Statement of Compatibility with Human Rights is at Attachment A.


ATTACHMENT A

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

Consular Privileges and Immunities (Indirect Tax Concession Scheme)
Amendment (Saudi Arabia) Determination 2023 (the Amendment)

 

This Disallowable Legislative Instrument 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 of the Disallowable Legislative Instrument

This disallowable legislative instrument will amend Schedule 1 within the Consular Privileges and Immunities (Indirect Tax Concession Scheme) Determination 2000 (the Determination). These amendments will reflect all new and upgraded Indirect Tax Concession Scheme arrangements that have been negotiated since the last amending determination in 2022.

 

The purpose of the Amendment is to amend the Determination to create a new Indirect Tax Concession Scheme (ITCS) package for Saudi Arabia by providing indirect tax concessions to its consular posts in Australia and accredited staff.  The effect of the Amendment is to add 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 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, the Department of Treasury confirmed 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 non-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.

 

Human rights implications

This Disallowable Legislative Instrument does not engage any of the applicable rights or freedoms.

 

Conclusion

This Disallowable Legislative Instrument is compatible with human rights as it does not raise any human rights issues.

 

 

 

Overview

The Consular Privileges and Immunities Act 1972 was enacted to ensure that consular officers of foreign countries are granted certain privileges and immunities in Australia, in accordance with international conventions and practices. This Act addresses the need to balance the sovereign immunity of consular posts with the domestic legal requirements of Australia. The Consular Privileges and Immunities (Indirect Tax Concession Scheme) Amendment (Saudi Arabia) Determination 2023, issued under the authority of the Minister for Foreign Affairs, was created to extend indirect tax concessions to the consular posts and accredited staff of Saudi Arabia in Australia, in line with reciprocal agreements. This amendment reflects the international practice of granting indirect tax concessions to consular posts, ensuring alignment with the Vienna Convention on Consular Relations 1963. The policy objective is to foster diplomatic relations and economic benefits by encouraging consular posts to purchase goods and services within Australia, thereby supporting the broader Australian economy.

Scope and Application

The Consular Privileges and Immunities (Indirect Tax Concession Scheme) Amendment (Saudi Arabia) Determination 2023 amends the Consular Privileges and Immunities (Indirect Tax Concession Scheme) Determination 2000 by creating a new Indirect Tax Concession Scheme (ITCS) package for Saudi Arabia, providing indirect tax concessions to its consular posts in Australia and accredited staff. The purpose of this Amendment is to extend the existing ITCS to include Saudi Arabia, in line with international practice and reciprocity. The ITCS operates on a reciprocal basis, with individual packages negotiated between Australia and the respective country, and the concessions are extended to consular posts and accredited staff from either the date the post opened or a date agreed upon during negotiations. The Amendment adds items to Schedule 1 of the Determination, which lists the ITCS packages available to particular consular posts. The legislation applies to consular posts of Saudi Arabia and their accredited staff within Australia. The scope of the legislation is limited to the indirect tax concessions provided under the ITCS and does not affect other tax-related matters or consular privileges and immunities outside the scope of the ITCS. The Amendment is exempt from sunsetting provisions as it gives effect to an international obligation of Australia. The Statement of Compatibility with Human Rights confirms that the Amendment is compatible with human rights and freedoms as it does not raise any human rights issues.

Key Provisions

The Consular Privileges and Immunities (Indirect Tax Concession Scheme) Amendment (Saudi Arabia) Determination 2023 amends the existing Determination under the Consular Privileges and Immunities Act 1972 to create a new indirect tax concession scheme package for Saudi Arabia. This Amendment adds Saudi Arabia to the list of countries whose consular posts in Australia are eligible for indirect tax concessions (section 1). The primary effect of this Amendment is to extend the benefits of the Indirect Tax Concession Scheme (ITCS) to Saudi consular posts and their accredited staff, providing them with tax exemptions on certain acquisitions of goods and services within Australia (section 2). The Amendment imposes specific obligations on the parties involved, primarily focusing on the facilitation of indirect tax concessions to Saudi consular posts in accordance with the negotiated terms. The Minister for Foreign Affairs is tasked with ensuring that the Commissioner of Taxation compensates the heads of these consular posts for any indirect taxes they would have otherwise been liable for, in line with the provisions set out in section 10A of the Consular Privileges and Immunities Act 1972. The Saudi Arabian government, in turn, must adhere to the terms and conditions of the ITCS as outlined in the Determination and the Amendment. Breach of the provisions set out in the Amendment does not explicitly list specific offences, penalties, or consequences for non-compliance within the text of the Amendment itself. However, any actions that contravene the terms of the ITCS could potentially be subject to general legal repercussions under the relevant tax and consular laws. It is important for all parties to comply with the terms to avoid any indirect tax liabilities or legal disputes. The indirect tax concessions provided under the ITCS are designed to foster reciprocal arrangements that benefit both Australia and the participating countries by encouraging the purchase of goods and services within Australia rather than importing them directly.

Legal classification tags

Area of Law
International Trade Law
Instrument
Statutory Instrument
Concepts
Commencement Provisions
Regulatory Standards
Reporting & Disclosure Obligations
Enforcement Powers
Catchwords
Indirect Tax Concession Scheme

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.