The higher than expected $7.5 billion budget surplus revealed by Australian Treasurer, Peter Costello recently has given the government an excellent opportunity to forge ahead with much needed reform to the nation's international taxation laws, says the Business Council of Australia.
As part of his last budget speech, Costello announced a series of reforms to simplify Australia's notoriously complex international business regulations in the hope of fostering higher levels of investment. Broadly, the reforms sought to: reduce the compliance costs associated with the controlled foreign company rules; reduce tax on certain types of foreign business income and gains; modernise Australia’s tax treaty network; and reform the foreign investment fund rules. However, it is unlikely that any changes will be enacted until at least the middle of next year, whilst a consultation process takes place.
“The BCA and business hopes that the additional revenue now available to the Government will prompt a re-think by those who acknowledge the importance of the changes but oppose part or all of the Board of Taxation-recommended package on cost grounds,” commented BCA Chief Executive, Ms Katie Lahey last week.
“Australia’s international tax laws are widely recognised as too complex, and generally uncompetitive with tax laws in other countries," Ms Lahey continued, adding: “An efficient and equitable tax system will attract more investment and skilled labour will be a key component in ensuring Australia’s economy to grow in the future,”
“This is not about tax breaks for big business. These reforms emphasise removing the unnecessary complexity which hurts any business with an international focus, regardless of whether it is small or large," the BCA chief concluded.
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