Double taxation occurs when the same income from the same source is taxed by two different countries. To prevent this from happening, in February 2, 2000, the double tax treaty between Australia and Romania was signed. The treaty was called The Agreement Between Australia and Romania for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Protocol. One of the main reasons why the agreement was executed is to improve and create closer economic relations between the two countries by eliminating the burden to trade and investment caused by double taxation. Another reason is to create a solid legal framework between Australia and Romania in preventing international fiscal evasion. Our Romanian accountants can advise you on how the double tax treaty works.
Income covered by the Romania – Australia double tax treaty
Not all types of income are covered by the double tax treaty signed by Romania and Australia. Our Bucharest accounting firm has listed down the types that are covered:
– income tax for individuals,
– tax on profit,
– salary and other remuneration tax,
– agricultural income tax,
– tax on resource rent for the exploration and exploitation of petroleum resources,
– other taxes that are similar and substantially identical imposed either by Australia or Romania.
Obligations under the Romania – Australia double tax treaty
One obligation under the double tax treaty between Romania and Australia is that both countries should provide methods for eliminating the occurrence of double taxation. The methods provided for are:
– tax exemption,
– tax credit,
– deduction of tax paid from the gross income.
Tax exemption means that an individual’s income is no longer subject to tax in one country once it has been taxed in another. Tax credit is deducting from the taxable income the amount paid as tax in one country, while tax deduction is subtracting the tax paid in one country from the gross income earned.
Other obligations under the double tax treaty between Romania and Australia are:
– the establishment of a procedure for the resolution of any issues involving the application of tax laws of the respective countries,
– the exchange of information concerning such taxes,
– notifying the other party of any substantial change of any tax laws that will affect the double tax treaty.
Our experts in accounting in Romania are knowledgeable of the application of the remedies under the treaty.
If you are engaged in international trade, it is necessary that you know about the Romania – Australia double tax treaty. Just get in touch with our specialists in audit in Romania to know more about it.