Draft Double Taxation Relief and International Tax Enforcement (Austria) Order 2018

Anneliese Dodds Excerpts

Monday 21st January 2019 General Committees

[Anneliese Dodds (Oxford East) (Lab/Co-op)]

It is a pleasure to serve with you in the Chair, Mrs Main. As the Minister mentioned, the treaty is one of a number that we have discussed in Committee, and has been introduced following the UK’s ratification of the OECD’s multilateral instrument for double tax treaties.

My hon. Friend the Member for Huddersfield asked a pertinent question—why Austria? We have asked a number of times for an indication of the schedule that the Government are following, having passed the MLI, when negotiating such treaties. That indication would be helpful for us to understand which treaties are still to come before a Committee.

As I just mentioned, the treaty follows on from the ratification of the multilateral instrument. In fact, the explanatory memorandum to the order states that, by broadly adopting the MLI model, the Government have been able to

“encourage and maintain international consensus on the appropriate tax treatment of cross-border economic activity and thus promote international trade and investment.”

There are, however, a number of differences between the treaty and OECD model, and we have not been provided with an explanation of why that is the case. From my reading, it looks like there are about 16 differences between the treaty and what is set out in the MLI. I will not go through exactly which articles those differences crop up in.

Some of those deviations from the OECD model may well be valid, but if that is the case, the rationales are not explained in the notes supplied with the double tax order. I would surmise, for example, that the treaty contains no provisions on withholding taxes applied to interest, because the UK and Austria do not routinely impose such taxes on each other and there is therefore no locus for discussing that within the agreement.

Other alterations could be more problematic. A worrying difference between the double tax agreement and the OECD model is in article 22—the non-discrimination section. The provision in the OECD model relating to stateless persons is not included in the treaty. As with other double tax treaties that we have discussed in Committee, it is not clear whether that was at the request of the UK, because it has adopted a different approach to the OECD in that area, or whether, alternatively, it was at the request of Austria. It would be helpful to know that.

A large number of people now face statelessness, and that number is likely to increase because of violence and conflict in the world. As I am sure the Committee is aware, Austria has become home to quite a large number of people fleeing violence in other parts of the world, so it is quite important those people are not discriminated against in the tax system. The OECD’s model in the article on non-discrimination sets out that people who are stateless should not be subject to additional unfair taxes, but that provision is not in this double tax agreement. It would be helpful if we had an explanation of why that is the case.

Just to be completely clear: quite often when the word “stateless” is used in these discussions, it refers to stateless income. I am not talking about that but about stateless people. It may not be possible for the Minister to respond to that question in detail now, but I hope that, if not, he can do so by letter, please. It would be enormously useful when discussing these kinds of treaties if the Committee had an indication of why some provisions in the OECD model may have been adopted or otherwise, and why certain choices that are available in the OECD model may have been determined one way or the other.