Australia has high corporate tax rate

Australia's high corporate tax study

Monday 25th May 2013

Australia has recorded the 8th highest corporate tax rate in a 26-country comparison study according to research conducted by UHY, the international accounting and consultancy network. (see page 2).

The study revealed that on taxable profits of USD $100,000, the Australian government takes 30% in tax which is around 5% higher than the global average in the countries analysed.

For corporate profits of USD $100,000, governments in China and Malaysia take 25% of profits, the US government 24.05% and the UK government just 20% in corporate tax.

UHY Haines Norton Tax Partner,Michael Coughtreysays that Australia’s comparatively high corporate tax rates put businesses at a disadvantage in a global market and can potentially hinder economic growth in Australia, however, with a large Budget deficit this is not a government priority.

“In a global context, lower corporate tax economies can ultimately offer their businesses more opportunities to put greater proportions of profits back into the business and product development,” Mr Coughtrey said.

“More investment and lower costs therefore mean countries like China and Malaysia can have a relative competitive advantage on price and product quality when it comes to Global exports and imports.

“The combination of high business taxes, high wage on-costs and the high Aussie dollar is making it increasingly difficult for Australian business to compete internationally and the government needs to address this.

“Without any action we’re likely to see more businesses based in Australia look at relocating overseas which will have dire consequences for the economy and employment.” Mr Coughtrey said.

Of the countries included in the study, Japan charges the highest taxes on corporate profits of USD 100,000 (43%) while at the opposite end of the scale the UAE charges no tax on corporate profits, and the Irish government just 12.5%.

Rajiv Saxena, Managing Partner at UHY UAE and member of UHY in the UAE, says: “Businesses in the UAE benefit from a very generous tax regime. … The low cost of doing business here has helped turn the UAE into a major global business hub.”

Last year the UK and Canada also highlighted the importance of cutting the headline corporate tax rate by reducing their corporate tax rate to sit well below G7 average.

To view study data Download PDF