Commonwealth Numbered Regulations - Explanatory Statements

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INTERNATIONAL ORGANISATIONS (PRIVILEGES AND IMMUNITIES--ASIAN INFRASTRUCTURE INVESTMENT BANK) REGULATION 2015 (SLI NO 172 OF 2015)

Explanatory Statement

 

Select Legislative Instrument No. 172, 2015

 

Issued by the Authority of the Minister for Foreign Affairs

 

International Organisations (Privileges and Immunities) Act 1963

 

International Organisations (Privileges and Immunities) (Asian Infrastructure

Investment Bank) Regulation 2015

 

The International Organisations (Privileges and Immunities) (Asian Infrastructure Investment Bank) Regulation 2015 ( the Regulation) provides the required privileges and immunities to the Asian Infrastructure Investment Bank the Bank), thereby gives effect to Australia's obligations as a prospective member of the Bank and facilitating Australia's ratification of the Asian Infrastructure Investment Bank Articles of Agreement.

 

Section 13 of the International Organisations (Privileges and Immunities) Act 1963 (the Act) provides that the Governor-General may make regulations, not inconsistent with the Act, prescribing all matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.

 

In summary, the Regulation provides that the Bank: is an international organisation to which the Act applies; has juridical personality and legal capacities; and specifies the privileges and immunities under the Act which apply to the Bank.  Section 8 of the Regulation also provides, for the purposes of section 11C of the Act regarding the application of the indirect tax concession scheme, that acquisitions by the Bank intended for the official use of the Bank are covered by the Regulation.

 

Further details of the Regulation are set out in the Attachment

 

The Act specifies no conditions that needed to be satisfied before the power to make the Regulation could be exercised.

 

The Regulation commenced on [insert] and is a legislative instrument for the purposes of the Legislative Instruments Act 2003.

 

The Bank is an international financial institution proposed by the Chinese Government to assist in funding major infrastructure projects throughout Asia. The Treasurer, on behalf of Australia, signed the Articles of Agreement in Beijing, China, on 29 June 2015.  The Articles of Agreement can be found on the AIIB's public website (www.aiibank.org) and also on the Australian Treaties Library accessible through AustLII (www.austlii.edu.au).    

 

Following completion of all necessary ratification processes, Australia will lodge its instrument of ratification.  Australia's membership of the AIIB will become effective on the date of lodgement, or on the day on which the Bank is established (whichever is the later).

The Bank will be established once the Articles of Agreement enters into force, which will occur once instruments of ratification, acceptance or approval have been deposited by at least ten signatories whose initial subscriptions in the aggregate comprise not less than 50 per cent of the total subscriptions of signatories.  This is expected to occur relatively quickly, likely by the end of 2015.  The Asian Infrastructure Investment Bank Act 2015 (the AIIB Act) which provides authority and an appropriation for the payment of Australia's capital contribution to the Bank will commence on the day after receiving the Royal Assent, or when Australia becomes a member of the Bank (whichever is the later).  A separate regulation will be made under the AIIB Act to confer additional privileges and immunities on the Bank and extend certain privileges and immunities to persons connected with the Bank.

 

States and Territories were consulted during preparation of the National Interest Analysis and the development of the legislation. All relevant Ministers and Commonwealth Government Departments were consulted during the drafting of this Regulation.  The Office of Best Practice Regulation was consulted and confirmed that a Regulation Impact Statement is not required as regulation is relatively straightforward and the impact on business and the community is minimal (OBPR ID 19400).  No public consultation was undertaken during the development of the legislation, however the Joint Standing Committee on Treaties (JSCOT) and the Senate Economic Legislation Committee (SELC) held public hearings and called for public submissions during the introduction of the Asian Infrastructure Investment Bill 2015. 

 

 

 

 

 

 


 

Statement of Compatibility with Human Rights

 

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

International Organisations (Privileges and Immunities) (Asian Infrastructure

Investment Bank) Regulations 2015

 

Overview

This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

The International Organisations (Privileges and Immunities) (Asian Infrastructure Investment Bank) Regulation 2015 (the Regulation) is an instrument made under the International Organisations (Privileges and Immunities) Act 1963 (Cth) (the Act).  The Regulation will confer such privileges and immunities to the Asian Infrastructure Investment Bank (the Bank) as are required to give effect to the Bank's Articles of Agreement and to confer upon the Bank in Australia legal status and such legal capacities as are necessary for the exercise of its powers and the performance of its functions.   Provision of privileges and immunities is standard practice when Australia becomes a member of an international organisation and is required by the terms of the relevant international agreement to extend privileges and immunities to that organisation.

In summary, the Regulation provides that the Bank:

*         is an international organisation to which the Act applies;

*         has juridical personality and legal capacities; and

*         specifies the privileges and immunities under the Act which apply to the Bank, being those in items 6, 7 and 8 of the First Schedule to the Act (section 7 of the Regulation).  These items provide for exemptions from: duties on the importation or exportation of goods for official use and publications; the liability to pay or collect taxes other than duties for the importation or exportation of goods and of the income, property, assets and transactions of the organisation from such taxes; and from taxes of obligations and securities issued or guaranteed by the organisation and of interest and dividends on such obligations and securities.  Section 8 of the Regulation also provides (for the purposes of section 11C of the Act) regarding the application of the indirect tax concession scheme, that acquisitions by the Bank intended for the official use of the Bank are covered by the Regulation. 

Importantly, the privileges and immunities that are provided for in this Regulation primarily relate to exemptions on duties and the payment and collection of taxes and do not have any human rights implications.

A separate regulation (the Asian Infrastructure Investment Bank Regulation 2015) will be made under the Asian Infrastructure Investment Bank Act 2015 to confer additional privileges and immunities on the Bank and to extend certain privileges and immunities to persons connected to the Bank. A separate Statement of Compatibility with Human Rights will be prepared for this regulation.

Human rights implications

Australia's membership of the Bank is consistent with Australia's obligations under the International Covenant on Economic, Social and Cultural Rights (the ICESCR).  In particular Article 2(1) requires that States Parties take steps, including through international assistance and co-operation, to assist in the progressive realisation of the economic, social and cultural rights recognised by ICESCR.  The main purposes of the Bank include fostering sustainable economic development and promoting regional cooperation and partnership in addressing development challenges.  As the Regulation assists the Bank to fulfil its mandate, it can be said to be promoting the obligations under Article 2(1) of ICESCR.

The Regulation also provides some restrictions on the privileges and immunities conferred on the Bank. The purpose of conferring privileges and immunities on an organisation such as the Bank is to assist it to fulfil its mandate.  Conferring legal personality on the Bank and exemption from certain duties and taxes will enable the Bank to perform its functions.  The Regulation makes clear that the privileges and immunities conferred are for the benefit of the Bank, therefore, and not the personal benefit of individuals (section 8).  Importantly, the Bank may also choose to waive any privileges or immunities to which it is entitled (section 12).

Conclusion

This Legislative Instrument is compatible with human rights as it does not raise human rights issues, has no adverse implications for Australia's compliance with its human rights obligations and does not adversely affect the human rights of individuals.  The main purposes of the Bank include fostering sustainable economic development and promote regional cooperation and partnership in addressing development challenges.  To this extent, the Legislative Instrument should contribute to the advancement of human rights.


 

ATTACHMENT

 

Details of the International Organisations (Privileges and Immunities) (Asian Infrastructure Investment Bank) Regulation 2105

 

Part 1 - Preliminary

Section 1 - Name

Section 1 provides that the name of the Regulation will be the International Organisations (Privileges and Immunities) (Asian Infrastructure Investment Bank) Regulation 2015 (the Regulation).

Section 2 - Commencement

Section 2 provides that the Regulation will commence at the same time as sections 3 to 9 of the Asian Infrastructure Investment Bank Act 2015 on the date of lodgement, or on the day on which the Bank is established (whichever is the later).

Section 3 - Authority

Section 3 provides that the Regulation is made under the authority of the International Organisations (Privileges and Immunities) Act 1963 (the Act). 

Section 4 - Definition

Section 4 provides for the definition of certain terms used in the Regulation, including 'Act', 'Bank' and 'tax invoice'.

Part 2 - Asian Infrastructure Investment Bank

Section 5 - Act applies to the Bank

Section 5 provides that the Bank is an international organisation to which the Act applies, and regulations may therefore be made under the Act in relation to the Bank.

Section 6 - Bank to have judicial personality and legal capacities

Section 6 confers legal personality and capacities on the Bank.  Specifically it provides that the Bank  is a body corporate with perpetual succession, and is able to: enter into contracts; acquire, hold and dispose of assets and property; institute and be a party to legal proceedings.

Section 7 - Privileges and Immunities of the Bank

Section 7 states that the Bank will have the privileges and immunities specified in items 6, 7 and 8 of the First Schedule to the Act.

These include exemptions from;

-span style='font:7.0pt "Times New Roman"'>   duties on the importation or exportation of goods by the organisation for its official use and publications of the organisation imported or exported by it.

-span style='font:7.0pt "Times New Roman"'>   the liability to pay or collect taxes on duties, income, property, assets and transactions of the organisation.

-span style='font:7.0pt "Times New Roman"'>   taxes of obligations and securities issued or guaranteed by the organisation and of interest and dividends on such obligations and securities.

-span style='font:7.0pt "Times New Roman"'>   currency and exchange restrictions

As noted above, a separate regulation (the Asian Infrastructure Investment Bank Regulation 2015) will be made under the Asian Infrastructure Investment Bank Act 2015 to confer additional privileges and immunities on the Bank, and to extend certain privileges and immunities to person's connected to the Bank.

Part 3 - Indirect tax concession scheme

Section 8 - Indirect tax concession scheme - acquisitions

Section 8 provides for indirect tax concessions for the acquisition of goods and services intended for the official use of the Bank.

Regulation 9 - Indirect tax concession scheme - conditions

Section 9 sets out the conditions that must be met in order for the Bank to receive tax concessions for the acquisition of motor vehicles and other goods and services intended for the official use of the Bank.

Tax concessions are not available if the Bank disposes of motor vehicles within 3 years or other goods within 2 years after they were acquired (except where the Bank disposes of the motor vehicle/goods to a person entitled to an indirect tax concession). Tax concessions are not available on services assigned to a person who is not entitled to an indirect tax concession. The sale of goods as part of a sale and lease-back arrangement is not a disposal of the goods.

If the Bank disposes of goods within the period specified (3 years for motor vehicles and 2 years for other goods) to a person who is not entitled to a tax concession, there will be an amount to be repaid to the Commonwealth which is specified under sections 9(3) and 9(4) of the Regulation.

Section 10 - Indirect tax concession scheme - claims for payment

Section 10 outlines the procedure for claiming a payment under section 9, which deals with acquisitions under the indirect tax concession scheme, including that a claim for payment must be signed by, or on behalf of, the President of the Bank and must be sent with the tax invoice for the acquisition.  Section 10 also specifies where claims must be sent for processing, and timeframes for making a claim. .

Section 11 - Indirect tax concession scheme - manner of payment

Section 11 provides that a payment to the Bank under the indirect tax concession scheme is to be paid to a single recipient, or an account nominated by, or on behalf of, the President of the Bank.

Part 4 - Other matters

Section 12 - Waiver of privileges and immunities

Section 12 provides that the Bank may waive any privileges or immunities to which the Bank is entitled because of the Act or the Regulation.  

Section 13 - Delegation by the Minister

Section 13 provides that the Minister may by writing delegate by writing the Minister's powers under paragraphs 9(1)(b) and (5)(b) of the Regulation.

 


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