Australian Business Leader Says International Tax Reform Urgent

by Mary Swire, Tax-News.com, Hong Kong

05 April 2002

Speaking at a conference at the Melbourne Institute of Applied Economic and Social Research, the President of the Business Council of Australia (BCA) warned that the country's international tax regime is need of major and urgent reform if it is to remain internationally competitive.

'The pattern of tax in Australia is such that we are ill-equipped to deal with the modern world. We have an unfriendly international tax regime,' John Schubert told delegates, pointing to the tax treatment of repatriated profits as a prime example.

Dr Schubert revealed that Australia has the second highest corporate tax rate of all OECD members, with only Luxembourg levying a higher level of tax on companies based there. He cautioned that if tax reform is not forthcoming, Australia risks becoming a 'branch office economy', as domestic companies expand overseas in search of more attractive tax regimes.

Speaking later to Dow Jones Newswires, the BCA President explained that, in addition to addressing the country's high corporate tax levels, the Australian government needs to tackle the complexity of the international tax regime.

Currently, he explained, profits earned by overseas branches of domestic companies risk double taxation, and the income earned by foreign corporations based in Australia can be similarly affected.

Dr Schubert also revealed to the news service that current tax rules for individuals make it hard to attract and retain vital foreign talent in Australia, giving the example that people working in the country for longer than five years are liable for Austalian capital gains taxes on overseas assets, even if those assets were acquired before they came to the country.

Recommended