The ATO released the synthesised text of Australia’s double taxation agreement (DTA) with Denmark on 29 October 2021. It outlines the modifications that have been made to the DTA by the Multilateral Convention to Implement Tax Treaty Measures to Prevent Base Erosion and Profit Shifting (MLI). The dates of the deposit of instruments of ratification, acceptance or approval were 26 September 2018 (for Australia) and 30 September 2019 (for Denmark).

The provisions of the MLI have effect with respect to DTA for:

  • Australia from 1 January 2020 for withholding tax and 1 July 2020 for other taxes;
  • Denmark from 1 January 2020 for withholding tax and 1 January 2021 for other taxes.

Extract from ‘Synthesised Text’

As a little taste of the weird and wonderful world of the MLI, check out just the commencement date issues.

Entry Into Effect of the MLI Provisions

The provisions of the MLI applicable to the Agreement do not take effect on the same dates as the original provisions of the Agreement. Each of the provisions of the MLI could take effect on different dates, depending on the types of taxes involved (taxes withheld at source or other taxes levied) and on the choices made by Australia and Denmark in their MLI positions.

Dates of the deposit of instruments of ratification, acceptance or approval:

26 September 2018 for Australia and 30 September 2019 for Denmark.

Entry into force of the MLI:

1 January 2019 for Australia and 1 January 2020 for Denmark.

In accordance with paragraph 1 of Article 35 of the MLI, the provisions of the MLI (other than Article 16 Mutual Agreement Procedure and Part VI Arbitration) have effect with respect to this Agreement:

a)     with respect to taxes withheld at source on amounts paid or credited to non-residents, where the event giving rise to such taxes occurs on or after 1 January 2020; and

b)     with respect to all other taxes levied by Australia, for taxes levied with respect to taxable periods beginning on or after 1 July 2020.

c)     with respect to all other taxes levied by Denmark, for taxes levied with respect to taxable periods beginning on or after 1 January 2021.

In accordance with paragraph 4 of Article 35 of the MLI, Article 16 of the MLI (Mutual Agreement Procedure) has effect with respect to this Agreement for a case presented to the competent authority of a Contracting State on or after 1 January 2020, except for cases that were not eligible to be presented as of that date under the Agreement prior to its modification by the MLI, without regard to the taxable period to which the case relates.

In accordance with paragraph 1 of Article 36 of the MLI, the provisions of Part VI (Arbitration) of the MLI shall have effect with respect to this Agreement:

a)     with respect to cases presented to the competent authority of a Contracting State (as described in subparagraph a) of paragraph 1 of Article 19 (Mandatory Binding Arbitration) of the MLI), on or after 1 January 2020; and

b)     with respect to cases presented to the competent authority of a Contracting State prior to 1 January 2020, on the date when both Contracting States have notified the Depositary that they have reached mutual agreement pursuant to paragraph 10 of Article 19 of the MLI, along with information regarding the date or dates on which such cases shall be considered to have been presented to the competent authority of a Contracting State (as described in subparagraph a) of paragraph 1 of Article 19 of the MLI) according to the terms of that mutual agreement.

[LTN 209, 29.10.21]

[Tax Month – November 2021Previous 2021] 7.11.21

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