Australia To Shutter 'Harmful' Offshore Banking Unit Regime
Mary Swire, Tax-News.com, Hong Kong
19 March, 2021
The Australian Government has confirmed that it will amend its offshore banking unit regime after it was designated a harmful tax regime by the OECD and the European Union.
The OBU regime was established in 1992. It provides a more attractive tax rate for offshore banking activity conducted by Australian registered banks. In October 2018 the OECD's Forum on Harmful Tax Practices (FHTP) raised concerns during a review of this regime, including the concessional tax rate and the ring-fenced nature of the regime.
Legislation is to be tabled in parliament, the Government announced on March 12, 2021. This will amend the OBU to address these concerns by removing the preferential tax rate and closing the regime to new entrants.
Existing participants operating within the OBU regime will continue to access the concessional tax rate for a period of two years, up to the end of the 2022-23 income year.
The Government will look at options for a new regime that complies with international standards in the intervening two-year period.