After nearly four years of negotiations, on March 28 a first tax treaty between Australia and Israel was signed; as soon as both parliaments accept the treaty it will go into effect.
The reduced withholding tax rates on interest, dividends and royalties of the new treaty resulting in a favorably enhanced bilateral investment environment and allowing Australian business to access to world-renowned Israeli capital and technology. The treaty offers solutions to potential double taxation and the essential tax transparency for bi-lateral investment.
“Israeli technology and innovation across a range of vital industries including healthcare and renewable energy contribute already immensely to business and life in Australia”, explains Advocate Anna Moshe. Moshe is partner at the high-tech firm of Pearl Cohen and responsible for the listings of a number of Israeli companies on the Australian Stock exchange during the last 1,5 years - and a few more on the way. “We expect that the implementation of the tax treaty will allow Australian businesses to finally exploit opportunities in the Israeli market. We see that Australian companies are making themselves up to take advantage of Israel’s knowledge-based economy particularly in the fields biotechnology, IP and ICT”, says Moshe. Henriette Fuchs, partner and head of the Pearl Cohen tax department in Tel Aviv, and who accompanies the tax structuring of the firms’ clients on their way to the Sydney stock exchange is convinced the treaty is an incentive for Israeli companies to revisit the potential of Australia as a regional base for the supply of high value Israeli goods and services to clients in the Asian region. The treaty newly opens the doors to an entire continent, both for Israeli and Australian businesses. In our practice we have often seen Australian investor families and individuals interested in investment in Israel sometimes getting cold feet when learning there was no tax treaty in place to protect against double taxation. That will now change.
Some 20 Israeli companies already listed on the Australian stock exchange include Creso Pharma, Deragontail, Dotz Nano, Elsight, Esence-Lab, Fluence, Mobilicom, MGC Pharmaceuticals, Parazero, Roots Sustainable Agricultural Technologies, Sky & Space Global, Shekel Brainweigh, Security Matters, Splitit Payments, UltraCharge, Weebit Nano.
Australia has 25 million inhabitants and its economy has been booming. In terms of purchasing power the per-capita GDP in Australia is higher than that of the UK, Canada, Germany and France. In 2018 Australia left Switzerland behind when it hit the records with the largest average wealth per adult. The Australian Securities Exchange in Sydney is the 16th largest stock exchange in the world measured by domestic market capitalization. In 2017-18 total trade between Australia and Israel was worth over $1 billion, and investments in Australia by Israeli companies and individuals was $301 million in 2017.