CANBERRA: Australia should aim to cut the corporate tax rate to 25 per cent to stop businesses moving offshore.
That’s the view of business consultants BDO, which says it not only costs Australian jobs when a business moves elsewhere, but also millions of dollars in lost revenue.
At 30 per cent, Australia’s corporate tax rate is higher than all but three of the 34 OECD countries – Belgium, France and the United States.
Corporate tax is a big cost for business and obviously plays a significant role in any decision about where to base a company’s operations,” BDO tax partner Mark Molesworth says.
In a new analysis, BDO says services-based firms – such as software and technology developers, whose geographic considerations are less important – are taking away up to $15 million in tax for every $100 million in turnover when they moves to another country. For manufacturers, it’s $4 million in lost tax per $100 million in turnover.
Mr Molesworth concedes it is not realistic for Australia to move to a very low corporate tax rate like Switzerland (8.5 per cent), Ireland (12.5 per cent) or Canada (15 per cent), but there is certainly room to move lower.
Even in the US, where the rate is 35 per cent, President Barack Obama has recently proposed lowering it to 28 per cent.
