Australia-Portugal Tax Treaty Convention Alignment

The Australia-Portugal tax treaty aims to boost cross-border trade and investment by avoiding double taxation and fiscal evasion. Signed on 30 November 2023, it strengthens the economic relationship between the two nations. With around 73,000 Australians of Portuguese ancestry and significant two-way trade growth of 58%, the treaty promotes a favourable investment environment. The treaty's key features include reduced source taxation and country taxation for cross-border payments, creating a more favourable bilateral investment environment. It also contains integrity provisions, administrative cooperation, and a dispute resolution mechanism. The treaty is based on the OECD model tax treaty, with deviations to protect Australia's interests, such as preserving taxing rights over natural resources. The treaty addresses base erosion and profit shifting practices, minimises double non-taxation, and supports the government's plan to make multinationals pay their fair share of tax. It also reduces uncertainty and administrative burden for individuals, facilitating labour mobility and deepening cultural ties. The treaty provides lower rates of dividends, interest, and royalty withholding rates, and includes rules relating to data protection, consistent with each country's domestic law and international requirements. The negotiation of the treaty was initiated by Portugal in 2020, and is expected to provide benefits by avoiding double taxation and promoting cross-border trade and investment. The treaty is largely consistent with Australia's tax treaty practice, which includes a network of around 46 bilateral treaties, and is targeted at countries with significant trade and investment relationships.