Overview

The Diplomatic Privileges and Immunities (Indirect Tax Concession Scheme) Amendment Determination 2009 (No. 1) was enacted to amend the Diplomatic Privileges and Immunities (Indirect Tax Concession Scheme) Determination 2000, which provides tax concessions to diplomatic missions and accredited staff. This Amendment Determination was introduced to address the need for updating the list of countries eligible for indirect tax concessions under the scheme. The Diplomatic Privileges and Immunities Act 1967 empowers the Minister for Foreign Affairs to make such determinations. The policy objective of the Amendment Determination is to maintain the reciprocity of indirect tax concessions extended to diplomatic missions and accredited staff in line with international practice, while ensuring that the economic benefits to Australia are preserved and the scheme operates efficiently. This Amendment Determination updates the list of countries and the respective packages of indirect tax concessions, reflecting negotiated agreements and providing for retrospective application where necessary.

Scope and Application

The Diplomatic Privileges and Immunities (Indirect Tax Concession Scheme) Amendment Determination 2009 (No. 1) amends the Diplomatic Privileges and Immunities (Indirect Tax Concession Scheme) Determination 2000, which provides tax concessions on indirect taxes to diplomatic missions and accredited staff in Australia, in line with international practice. The Determination is made under section 10B of the Diplomatic Privileges and Immunities Act 1967, and the purpose is to update the list of countries covered by the scheme, by amending certain existing entries and adding new entries. The scheme provides tax concessions to diplomatic missions and accredited staff on indirect taxes, which are not covered by their immunity from direct taxes under the Vienna Convention on Diplomatic Relations. The level of concessions provided is based on reciprocity, and individual packages are negotiated with each country. The Determination applies to diplomatic missions and accredited staff from countries listed in the updated Schedule 1, which now includes new and amended entries. The scheme does not alter business operations as missions and individuals can claim refunds on eligible purchases directly from the Australian Tax Office, and it does not provide for an exemption from indirect taxes. The amendments made under this Determination were considered to be of a minor nature, where consultation was unnecessary under the Legislative Instruments Act 2003. The Office of Best Practice Regulation also advised that there was no need to prepare a Regulation Impact Statement for the Amendment Determination as it was not likely to affect business or competition.

Key Provisions

The Diplomatic Privileges and Immunities (Indirect Tax Concession Scheme) Amendment Determination 2009 (No. 1) (the Determination) amends the Diplomatic Privileges and Immunities (Indirect Tax Concession Scheme) Determination 2000 (the original Determination) by updating Schedule 1, which lists the countries covered by the Indirect Tax Concession Scheme (ITCS). This schedule is amended to include new entries and update existing entries, detailing the ITCS packages available to listed countries (s. 10B). The purpose of these amendments is to provide new and updated tax concessions to diplomatic missions and accredited staff in line with international practices. The ITCS provides tax concessions on indirect taxes for diplomatic missions and accredited staff, which are exempt from paying direct taxes under the Vienna Convention on Diplomatic Relations. The level of concessions provided is generally based on reciprocity, with individual packages negotiated with each country. These packages are usually agreed upon before they come into force under Australian legislation, and in some cases, they are made retrospective to provide access to concessions for purchases of goods and services already made. The commencement dates for individual packages are part of the negotiations for tax concessions and reflect the date at which the agreement was reached or allow for concessions on purchases already made, where there is a clear benefit to Australia. The Determination imposes obligations on the Commissioner of Taxation to pay an amount equal to the amount of indirect tax payable (if any) in respect of the supply of an acquisition to the head of a mission or a person in a class of persons determined by the Minister (s. 10B). Diplomatic missions and accredited staff must comply with the conditions and requirements of the ITCS to claim refunds on eligible purchases directly from the Australian Taxation Office. The Scheme does not provide for an exemption from indirect taxes and therefore does not pose any additional burden on retailers. The Scheme is designed to encourage diplomatic missions and accredited staff to purchase goods in Australia rather than directly importing them, which further assists the Australian economy. There are no specific offences, penalties, or civil/criminal consequences mentioned for breach of the Determination. However, the Assistant Treasurer has advised that the amendments made under this Determination will have a negligible impact on revenue. The Office of Best Practice Regulation has also agreed that the Amendment Determination was not likely to affect business or competition and advised there was no need to prepare a Regulation Impact Statement for the Amendment Determination.