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International trends in company tax rates — implications for Australia’s company income tax

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  • James Kelly

    (Treasury, Government of Australia)

  • Robert Graziani

    (Treasury, Government of Australia)

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    Abstract

    Worldwide statutory company tax rates have been declining. The choice of Australia’s statutory company tax rate is a balancing act, as Australia’s company income tax system has two basic roles. The first, to tax the income of Australian residents, is not affected directly by the international trend. The second, to tax the Australian source income of foreign investors, may be affected by that trend. Reducing Australia’s company tax rate (to reduce tax on foreign investors) could, but may not, improve national welfare by increasing foreign investment in Australia. Australia’s current statutory company tax rate is around the OECD average and is less than or equal to the rates in our major sources and destinations of foreign investment.

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    File URL: http://archive.treasury.gov.au/documents/930/PDF/02_International.pdf
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    Bibliographic Info

    Article provided by Treasury, Australian Government in its journal Economic Roundup.

    Volume (Year): (2004)
    Issue (Month): 3 (November)
    Pages: 23-47

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    Handle: RePEc:tsy:journl:journl_tsy_er_2004_3_2

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    Related research

    Keywords: Australia; company tax; corporate tax; foreign investment; taxation;

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    1. Bartelsman, Eric J. & Beetsma, Roel M. W. J., 2003. "Why pay more? Corporate tax avoidance through transfer pricing in OECD countries," Journal of Public Economics, Elsevier, Elsevier, vol. 87(9-10), pages 2225-2252, September.
    2. Robert E. Lipsey, 2002. "Home and Host Country Effects of FDI," NBER Working Papers 9293, National Bureau of Economic Research, Inc.
    3. Devereux, Michael P & Griffith, Rachel, 2003. "Evaluating Tax Policy for Location Decisions," International Tax and Public Finance, Springer, Springer, vol. 10(2), pages 107-26, March.
    4. Roger H. Gordon & Jeffrey K. MacKie-Mason, 1994. "Why Is There Corporate Taxation In a Small Open Economy? The Role of Transfer Pricing and Income Shifting," NBER Working Papers 4690, National Bureau of Economic Research, Inc.
    5. Michael P. Devereux & Rachel Griffith & Alexander Klemm, 2002. "Corporate income tax reforms and international tax competition," Economic Policy, CEPR;CES;MSH, CEPR;CES;MSH, vol. 17(35), pages 449-495, October.
    6. Grubert, Harry & Mutti, John, 2000. "Do Taxes Influence Where U.S. Corporations Invest?," National Tax Journal, National Tax Association, vol. 53(n. 4), pages 825-40, December.
    7. Slemrod, Joel, 2004. "Are corporate tax rates, or countries, converging?," Journal of Public Economics, Elsevier, Elsevier, vol. 88(6), pages 1169-1186, June.
    8. Agnès Bénassy-Quéré & Amina Lahrèche-Revil & Lionel Fontagné, 2003. "Tax Competition and Foreign Direct Investment," Working Papers 2003-17, CEPII research center.
    9. repec:fth:michin:359 is not listed on IDEAS
    10. Hines, James R. Jr., 1999. "Lessons from Behavioral Responses to International Taxation," National Tax Journal, National Tax Association, vol. 52(n. 2), pages 305-22, June.
    11. Gordon, R.H. & Mackie-Mason, J.K., 1994. "Why Is There Corporation Taxation in a Small Open Economy? The Role of Transfer Pricing and Income Shifting," Working Papers, Research Seminar in International Economics, University of Michigan 359, Research Seminar in International Economics, University of Michigan.
    12. Grubert, Harry, 2003. "Intangible Income, Intercompany Transactions, Income Shifting, and the Choice of Location," National Tax Journal, National Tax Association, vol. 56(1), pages 221-42, March.
    13. Mills, Lillian F. & Newberry, Kaye J., 2004. "Do Foreign Multinationals’ Tax Incentives Influence Their U.S. Income Reporting and Debt Policy?," National Tax Journal, National Tax Association, vol. 57(1), pages 89-107, March.
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