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A GATT compliant tax incentive for Australian businesses?

Published on 01 Feb 07 by "THE TAX SPECIALIST" JOURNAL ARTICLE

Australia would benefit from a new taxation initiative designed to encourage Australian businesses to adopt a more global focus, that is, to seek out opportunities to derive foreign source income. The challenge in designing such an initiative is twofold: in the first place, to avoid breaching the Subsidies Code of the General Agreement on Tariffs and Trade (GATT), to which Australia is a party, and, in the second place, to ensure that such a measure would not encourage a switch solely to activities that generate foreign source income, thereby neglecting the domestic market.

In this paper Chris Birchall canvasses, with a view to encouraging discussion on this topic, a possible way in which Australia could introduce a GATT compliant tax incentive for foreign source income derived by an Australian business. With the United States having failed in its recent attempts to introduce a GATT compliant tax mechanism to boost US exports, the article looks at some of the reasons why the US was unsuccessful and what Australia can learn from the US experience.

Author profile:

Chris Birchall CTA
Chris is a Client Director in the Tax Technical group with Pitcher Partners. Current at 28 November 2014 Click here to expand/collapse more articles by Chris BIRCHALL.
 
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