The governments of Australia and Japan agreed in principle on a new tax treaty aimed at boosting bilateral trade and minimising tax avoidance, Australian Treasurer Peter Costello announced last Friday. The current treaty between the two countries was signed in 1969. The new treaty will substantially reduce the withholding taxes imposed on dividends, interest and royalties paid between the two countries, Mr Costello said at the Asia Pacific Economic Cooperation forum's meeting of 21 finance ministers at the Queensland coastal resort of Coolum. "This will provide long-term benefits for business, making it cheaper for Australian and Japanese business enterprises to obtain intellectual property, equity and finance for expansion," he said. "These measures stipulated in the proposed new treaty are expected to enhance the already robust investment relationship between Australia and Japan and facilitate trade and investment flows between the two countries, while minimising opportunities for tax avoidance," he added.