Australia's governing coalition will try to ease the tax treatment of Australia-based companies operating overseas if it retains power in next month's general election, Peter Costello, the country's treasurer, said.
Mr Costello said one of his priorities was to help companies that derive much of their income overseas and pay tax on it but do not benefit from a tax credit in Australia. Financial institutions with operations in the UK and Europe are particularly affected.
“I would like to improve Australia's international taxation arrangements so that Australian companies can expand in foreign jurisdictions, while remaining domiciled in Australia,” said Mr Costello, who is expected to remain finance minister if the Liberal-National coalition wins the October 9 vote.
“We want to promote Australia as a place for regional headquarters for Australian companies but also for foreign companies,” he said in an interview with the Financial Times.
The plans come as News Corp, the biggest company on the Australian Stock Exchange, is preparing to move its domicile and primary listing to the US. But Mr Costello said the media group was moving mainly to qualify for inclusion in US equity indices. Nevertheless, the News Corp move has re-ignited fears inAustralia that the stock market is in danger of marginalisation. It underlined the difficultiesAustralian companies face when competing globally. The government's plans for tax legislation are based on a detailed review of the country's international tax arrangements published last year.
Mr Costello said changes to Australia's double taxation deal with the US had helped Australian companies in the US market. “But it is still a difficult thing, this double taxation treatment where Australian companies are deriving income from overseas.”
Mr Costello rejected the suggestion that Australian banks seeking to expand overseas were constrained by his “four pillars” policy. The four biggest institutions National Australia Bank, Westpac, ANZ and Commonwealth are forbidden to merge with each other even if they argue they need to to compete against global rivals.
After 14 years of uninterrupted economic growth in Australia, the coalition and the Labor opposition running neck-and-neck in opinion polls have broadly similar economic policies.