Explanatory Statement
Diplomatic Privileges and Immunities (Indirect Tax Concession Scheme) Amendment (Sudan) Determination 2019
Issued by the Authority of the Minister for Foreign Affairs
Subject: Diplomatic Privileges and Immunities Act 1967
Diplomatic Privileges and Immunities (Indirect Tax Concession Scheme) Amendment (Sudan) Determination 2019 (hereafter, the “Amendment”).
Section 10B of the Diplomatic Privileges and Immunities Act 1967 provides that the Minister may make Determinations for the Commissioner of Taxation to pay the head of the mission (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 that acquisition.
The purpose of the Amendment is to amend the Diplomatic Privileges and Immunities (Indirect Tax Concession Scheme) Determination 2000 (the “Determination”) to create a new Indirect Tax Concession Scheme (ITCS) package for Sudan, to provide indirect tax concessions to their diplomatic mission and accredited staff. 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 diplomatic missions.
Diplomatic missions and accredited staff are exempt from paying direct taxes under the Vienna Convention on Diplomatic Relations (Articles 23, 34, 36 and 37). In line with international practice, indirect tax concessions are also extended to diplomatic missions 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, including by our overseas missions. 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 missions and accredited staff from either the date the mission opened or a date agreed during negotiations. Reciprocity of the date of effect means that Australian missions and accredited staff will have access to the same or similar benefits in the relevant overseas country.
The ITCS, and its extension to new diplomatic missions 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 GST 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 diplomatic missions 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 likely 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 a specific diplomatic mission. 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 Diplomatic Privileges and Immunities (Indirect Tax Concession Scheme) Amendment (Sudan) Determination 2019 was enacted to amend the Diplomatic Privileges and Immunities (Indirect Tax Concession Scheme) Determination 2000, introducing a new indirect tax concession package for the Sudan diplomatic mission and its accredited staff in Australia. This amendment was introduced by the Minister for Foreign Affairs, as per the powers conferred under Section 10B of the Diplomatic Privileges and Immunities Act 1967. The primary policy objective of the Amendment is to align Australia’s tax concessions with international practice, extending indirect tax exemptions to diplomatic missions and their staff in line with the Vienna Convention on Diplomatic Relations. This ensures reciprocity, where Australian missions and accredited staff receive similar benefits in other countries. The Amendment adds Sudan to the list of countries with indirect tax concessions under the Indirect Tax Concession Scheme, providing economic benefits to Australia by encouraging local purchases and minimal impact on revenue, as advised by the Treasury.
Scope and Application
The Diplomatic Privileges and Immunities (Indirect Tax Concession Scheme) Amendment (Sudan) Determination 2019 is an amendment to the Diplomatic Privileges and Immunities Act 1967, specifically altering the Diplomatic Privileges and Immunities (Indirect Tax Concession Scheme) Determination 2000. This amendment extends indirect tax concessions to Sudan's diplomatic mission and accredited staff in Australia, aligning with international practice. The amendment adds Sudan as a new item to Schedule 1 of the Determination, which lists the various packages available to diplomatic missions. This extension of concessions is based on reciprocity and is negotiated individually with each country, ensuring that Australian missions and accredited staff also benefit similarly in overseas countries. The commencement of these concessions may be retrospective, reflecting either the date when the mission opened or a date agreed upon during negotiations, without any detriment to any person or organisation. This change is considered minor and does not necessitate consultation, as it does not alter the functioning of the Indirect Tax Concession Scheme. The Treasury has indicated that the impact on revenue will be negligible, and the Office of Best Practice Regulation has confirmed that there will be no significant regulatory impacts on business, individuals, or community organisations.
Key Provisions
The Diplomatic Privileges and Immunities (Indirect Tax Concession Scheme) Amendment (Sudan) Determination 2019 (the “Amendment”) amends the Diplomatic Privileges and Immunities (Indirect Tax Concession Scheme) Determination 2000 (the “Determination”) to introduce a new package of indirect tax concessions for Sudan’s diplomatic mission in Australia. This amendment is made under Section 10B of the Diplomatic Privileges and Immunities Act 1967, which allows the Minister to instruct the Commissioner of Taxation to compensate the head of the mission or a designated person with an amount equivalent to the indirect tax payable on the acquisition of goods or services (subsection 10B(1)). This amendment, detailed in Schedule 1 of the Determination, extends indirect tax concessions to Sudan's diplomatic mission and accredited staff, aligning with international norms and the Vienna Convention on Diplomatic Relations which exempts diplomatic missions and accredited staff from direct taxes.
The Amendment imposes specific obligations on the Australian government and the Sudanese diplomatic mission. The government is required to ensure that the Sudanese mission and its accredited staff receive the tax concessions outlined in the new package, which are based on the principle of reciprocity. The Sudanese mission, in turn, must comply with the conditions set forth in the amended Determination to avail themselves of the tax benefits. These obligations are integral to maintaining the diplomatic relations and the mutual benefits that arise from the indirect tax concessions.
The Amendment does not introduce new offences or penalties for breaches, but it is built upon the existing legal framework of the Diplomatic Privileges and Immunities Act 1967 and the Determination. Any failure by the Sudanese mission to adhere to the conditions of the tax concessions could potentially lead to the cessation of these benefits. While the specific civil or criminal penalties are not detailed in the Amendment itself, they would be governed by the broader legislative provisions and the terms of the indirect tax agreements. The Treasury has indicated that the financial impact of this Amendment is negligible, reinforcing the minor nature of the amendment and the limited scope for regulatory impacts on business, individuals, or community organisations.