On 1 August 2022, Treasury released draft legislation to prevent the taxation by Australia of Indian resident firms providing certain technical services performed outside Australia to Australian customers.
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This draft legislation gives effect to Australia’s commitments under the Australia-India Economic Cooperation and Trade Agreement (“AI-ECTA”) signed in April 2022.

Australia’s right to tax such income was affirmed in the Federal Court decision in Satyam Computer Services Limited v Commissioner of Taxation [2018] FCAFC 172. This decision created sufficient concern amongst Indian IT services multinational businesses that inter-Governmental discussions were required to address the issue, resulting in the proposed changes as outlined by us previously.

The proposed effective date for these changes is the later of the date of Royal Assent of this draft legislation and the date the AI-ECTA enters into force.

Treasury invited submissions from stakeholders on this draft legislation which closed on 8 August 2022.

If you wish to discuss this draft legislation further, please contact us.

Australia to give up taxing rights under Indian free trade agreement
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Australia to give up taxing rights under Indian free trade agreement