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BCA Says Tax System Is Barrier To International Expansion

by Mary Swire,, Hong Kong

18 December 2001

The Business Council of Australia (BCA) has responded to a discussion paper on business tax reforms, saying that it welcomes the suggestions made by professional service provider, Anderson, and that the Australian business taxation system, as it stands, acts as a barrier to international expansion.

The Anderson report looked at fostering the international growth of Australian companies, encouraging foreign multinationals to establish headquarters in the country, and attracting talented and qualified expatriate workers.

To this end, it recommended a review of the imputation system for dividends, a reduction of dividend withholding tax for foreign subsidiaries, the abolition of capital gains tax on the disposal of foreign subsidiaries with active businesses, the introduction of a tax amortisation to encourage research and development, and the exemption of foreign passive investment assets from Australian income tax for expatriate workers.

Speaking earlier this week, President of the BCA Dr John Schubert, was upbeat on the Anderson recommendations: 'We would be very confident that this would undoubtedly affect growth,' he confirmed. He added that at present, Australia is not an attractive location for either domestic businesses (as can be seen by the spate of defections to lower tax countries over the last year), or for international corporations.

According to the BCA chief, at present, around 15% of tax collected in Australia comes from the corporate sector, compared with an OECD average of around 9%.

'The pattern of taxation in Australia is ill-equipped to deal with the challenges of globalisation,' he explained. 'Australia's company tax as a share of GDP is the second highest in any country, behind only Luxembourg.'

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