• Service: Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 9/26/2013

Australia - Taxation relating to petroleum extraction in Timor Sea 

September 26: The Joint Petroleum Development Area (JPDA) is located between Australia and Timor Leste and was established by the Timor Sea Treaty in 2003.

The Timor Sea treaty provides a framework for taxation of activities in the JPDA.

  • Under the treaty, Timor Leste is allocated 90% taxing rights.
  • Australia is allocated 10% taxing rights (the framework percentage) in relation to business profits derived from the JPDA.

Both Timor Leste and Australia are entitled to impose taxes based on the framework percentage in accordance with their domestic laws.

The treaty also provides rules for the taxation of specific types of income by Australia and Timor Leste, such as air transportation, capital gains, dividends and employee remuneration.

Read a September 2013 report prepared by the KPMG member firm in Australia: Tax treatment in the Timor Sea

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