How does tax representation work in Australia?
What is tax representation in Australia?
Establishing tax representation in Australia enables goods to be imported and exported using a VAT number called GST in Australia (Goods and Services Tax). Tax representation therefore allows a company to operate for tax purposes like a local company even if it does not possess an entity or permanent establishment in Australia.
What are the benefits of tax representation in Australia?
• it allows companies based abroad to operate fiscally in Australia without having a permanent establishment.
• it gives them the possibility of importing, buying, selling in Australia like a local company without having a permanent establishment there.
• no taxation or payment of duties are imposed in Australia, as corporate tax remains payable in the country of domicile.
Moreover, tax representation also allows the introduction of advance stock in Australia, the establishment of a commercial team through social representation and BtoB or BtoC sales. Consequently, using this solution, you can import goods from ASIA, EUROPE, AFRICA and the UNITED STATES for direct sale in Australia. This solution enables a swift response to local administrative requirements and a minimisation of administrative costs.
Tax representation in Australia also helps to develop new markets and gain a strong local presence.
What types of GST and why?
GST is payable by the buyer based in Australia. Tax representation requires various registrations, notably with the GST management authorities and the customs department. The Standard Rate of GST is 10%; currently there is no reduced rate. It is managed through various customs and/or tax formalities.
The various GST solutions include:
• Simplified GST registration: this solution is implemented for companies that buy their goods directly from Australian companies. Australian companies handle the product export directly.
• Full GST registration: this solution is intended for companies wanting to import and sell their products in Australia.
Caution: the indirect tax system (GST) does not follow the same rules as in Europe and therefore does not use the same simplifications. There are a number of different solutions depending on your business; proper support is needed to manage these different formalities. All documentation will be submitted by the tax representative based in Australia on behalf the fiscally represented company. The tax representative will also be responsible for notifying the authorities of company activities through various declarations, will monitor the tax calculations and can handle the refund request related to the activities of the company represented.
Note: In Australia, in certain cases, it is possible to register retroactively in order to regularise past activities and, depending on the operations conducted, submit tax refund requests (GST) for previous years.