Explanatory Statement
Consular Privileges and Immunities (Indirect Tax Concession Scheme) Amendment (Sudan) Determination 2019
Issued by the Authority of the Minister for Foreign Affairs
Subject: Consular Privileges and Immunities Act 1972
Consular Privileges and Immunities (Indirect Tax Concession Scheme) Amendment (Sudan) Determination 2019 (hereafter, the “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 amount of indirect tax payable (if any) in respect of the supply of an acquisition.
The purpose of the Amendment is to amend the Consular Privileges and Immunities (Indirect Tax Concession Scheme) Determination 2000 (the “Determination”) to create a new Indirect Tax Concession Scheme (ITCS) package for Sudan by providing indirect tax concessions to its consular posts in Australia and staff accredited to those posts. The effect of the Amendment is to add a new item 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. 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, if there is a clear benefit to Australia, the commencement date allows access to concessions for purchases of goods and services already made. As these 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 of the date of effect means that Australian diplomatic missions and 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 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. The Treasury has advised 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.
This 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 (Sudan) Determination 2019, issued under the authority of the Minister for Foreign Affairs, amends the Consular Privileges and Immunities (Indirect Tax Concession Scheme) Determination 2000 to establish a new package of indirect tax concessions for Sudan's consular posts and accredited staff in Australia. This amendment was introduced to address the need for extending indirect tax concessions to consular posts and their staff, aligning with international practice and reciprocal agreements. The determination adds Sudan to the schedule of the Determination, listing the indirect tax concession packages available to specific consular posts. The policy objective is to encourage these posts and their staff to purchase goods and services in Australia, thereby providing economic benefits and maintaining reciprocity in international diplomatic relations. The commencement of these concessions is retrospective, extending benefits from the date the post opened or a date agreed during negotiations, without detriment to any person or organisation. This change has a negligible impact on revenue and is deemed to have no regulatory impacts or human rights implications.
Scope and Application
The Consular Privileges and Immunities (Indirect Tax Concession Scheme) Amendment (Sudan) Determination 2019 amends the Consular Privileges and Immunities (Indirect Tax Concession Scheme) Determination 2000 to extend indirect tax concessions to consular posts from Sudan and their accredited staff in Australia. This amendment applies to the consular posts of Sudan in Australia and their accredited staff, who are already exempt from direct taxes under the Vienna Convention on Consular Relations. The indirect tax concessions are designed to align with international practices and encourage economic interactions with Australia, particularly by facilitating the purchase of goods and services within the country. The Amendment introduces a new package to Schedule 1 of the Determination, which lists the various indirect tax concession schemes available to different consular posts. The commencement date for these concessions is retrospective to either the date the Sudanese consular post was established or a date agreed upon during negotiations, ensuring that the concessions benefit the Sudanese posts and their staff from the earliest possible date. This approach is consistent with reciprocal agreements, where Australian diplomatic missions and consular posts overseas also gain similar benefits in their respective host countries. The Amendment is expected to have a negligible impact on revenue and is seen as beneficial to Australia, encouraging economic engagement with Sudanese consular posts and their staff.
Key Provisions
The main operative sections of the Consular Privileges and Immunities (Indirect Tax Concession Scheme) Amendment (Sudan) Determination 2019 (Amendment) (sections 3 and 4) are designed to introduce new indirect tax concessions for Sudan's consular posts in Australia and their accredited staff. This Amendment adds Sudan to Schedule 1 of the Determination, which lists the packages available under the Indirect Tax Concession Scheme (ITCS) (section 4). This package will provide exemptions from indirect tax payments for Sudanese consular posts and staff, aligning them with the broader practice of indirect tax concessions for consular posts under the Vienna Convention on Consular Relations. This addition is made to foster reciprocal arrangements and economic benefits for Australia.
The Amendment imposes obligations on the parties involved, specifically the Minister for Foreign Affairs and the Commissioner of Taxation. The Minister is authorised to make Determinations under section 10A of the Consular Privileges and Immunities Act 1972 to facilitate the payment of indirect taxes to consular posts and their accredited staff (section 3). The Commissioner of Taxation is then required to implement these Determinations, ensuring that the indirect taxes payable for certain acquisitions by Sudanese consular posts and staff are remitted to the relevant authorities. This process maintains the balance of reciprocity and economic benefit outlined in the Amendment.
In terms of consequences for non-compliance, the Amendment does not explicitly state penalties for breaches. However, the underlying legislation, the Consular Privileges and Immunities Act 1972, includes provisions for both civil and criminal penalties for non-compliance with the Act's requirements. Breaches could potentially lead to fines or other civil penalties as prescribed by the relevant tax laws, although the specific penalties would depend on the nature and severity of the breach. Additionally, failure to adhere to the Determination could result in diplomatic repercussions or the withdrawal of the concessions granted under the ITCS.