Publication date: 25 Nov 20 |
Source: THE TAX INSTITUTE
SYDNEY, 25 November 2020: What can our tax system do better in order to promote investment in innovation by Australian businesses? Yasser El-Ansary, Chief Executive of the Australian Investment Council, told delegates at The Tax Summit: Project Reform Virtual Summit that, “What really drives activity at a fundamental level is the decisions that businesses make here in Australia and abroad about where they allocate their capital.”
“Every one of the conversations we [at The Australian Investment Council] have, whether it’s here in Australia or, certainly in pre-COVID times offshore, in markets like Asia… is geared around understanding what makes Australia a competitive and compelling proposition for investors,” Yasser said.
“We’ve still got a case to make, globally, about our credentials in that area and I think we’ve done well over successive economic cycles to attract investment, but I think we ought to challenge ourselves in every conversation about the tax system to understand well, what are the global dynamics that are going to drive that behaviour from investors?”
Pete Rhodes, ATI, Global Head of Tax at Aristocrat, added that, “Too many times you read news articles about successful Aussie businesses going offshore to find capital. And so, the question to my mind is, why is that? What can we as a nation do about that?”
Kimberley Simpson, CTA,Head of Global Tax and Treasury forCochlear Limited, said the ideal answer for most would likely be a corporate tax rate cut.
“We should be focussing on a corporate tax rate reduction, really, and that is the incentive across the board for everyone. But that argument has been had and had and pushed back and had again,” Kimberley said.
“So, if we’re not looking at a corporate tax rate reduction, we have to look at something else in the system. Some kind of incentive through the system to encourage investment, to encourage commercialisation. So if you’re looking at incentives through the tax system, its either for everybody or you have to work out some way to focus on those industries that the country deems we’re good at and we need to focus on.”
Kimberley suggested that MedTech and Biotech were “a natural fit” for that kind of incentive, and also palatable to an Australian public who want to do well in those areas.
Yasser added that, “We know that one of the sectors where Australia has a really significant competitive edge and capability to grow even further is an area like fintech. We have very bright capability here, great entrepreneurship, businesses that can go on and conquer the world, businesses like Afterpay leading the world in that platform area. But we have to be prepared to make the tough decisions, to say … here are the areas we really want to drive activity and we’re going to cater to that by putting in place policies across the tax system and across other areas of our economy, to support that outcome.”
“The COVID environment has only heightened our awareness I think, about the importance of doing the things that you are really good at, really well, and forgetting about the things where you really can’t compete.”
This commentary was made at The Tax Summit: Project Reform Virtual Summit event on 24 November 2020. The Tax Summit: Project Reform is an ambitious endeavour to define the priorities of reform for our tax system and will form the basis of a Case for Change paper.
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