Australian Tax Cuts May Raise US Tax Revenues

May 17, 2016 Taxation in Australia

Taxes in AustraliaCANBERRA – Australia is looking to cut corporate taxes to boost business activity, investment and employment levels, but the move may actual result simple in more taxes being paid in the USA with no benefit to Australia.

Cutting the rate of corporate tax in Australia will result in a rise in tax revenues in the USA, according to the result of new research released on May 16th by the Australia Institute.

Currently, the tax agreement between Australia and USA requires any US company operating in Australia to pay the difference between the tax in one country and the tax rate of the other country.

The standard corporate tax rate in Australia is 30 percent, while the rate in the USA is 35 percent, meaning that any US company operating in Australia still needs to pay 5 percent tax
The Coalition government of Australia intends to lower the corporate tax rate from 30 percent to 25 percent by the end of 2027.

Researchers at the Australia Institute claimed that due to the existing tax treaty, US companies will not benefit, as they will simply pay more tax in the USA.

Once the tax cut are fully implemented, the amount of taxes paid in the USA could rise to as much as USD 8.07 billion over the first decade.

It was noted that US companies play a significant role in the Australian economy, but the tax cuts would not benefit the country, lead to economic prosperity, development or employment, and would only result in higher tax revenues for the USA.

Photo by: Corey Leopold