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If US President-elect Donald Trump’s plans to slash America’s corporate tax rate come to fruition, as the UK’s did, Australia runs a significant risk of losing out on the tax dollars of international corporations, one mid-tier firm has warned.
Mr Trump plans to reduce the corporate tax rate in America to 15 per cent. It currently hovers at about 34 per cent for most corporations.
Such a change may attract enterprises from other countries, which have previously been deterred from entering the market by the high tax rate, to open operations in the US, BDO’s partner in charge for tax, Marcus Leonard, told AccountantsDaily.
“Such a reduction will leave Australia’s current 30 per cent tax rate looking incredibly uncompetitive in a global context,” he said.
Mr Leonard noted that when the UK slashed its corporate tax rate to 20 per cent, many international corporations moved their headquarters back to the UK over just 18 months.
He fears that corporations will be reluctant to have their profits taxed in Australia when other significant economies like the UK, some Asian markets and potentially the US are significantly more competitive.
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