OECD calls for alignment of corporate tax rates: BDO Comments

OECD calls for alignment of corporate tax rates: BDO Comments

The Organisation for Economic Co-operation and Development’s (OECD) latest report, Going For Growth 2021 – Shaping A Vibrant Recovery, indicates that therecovery brings an opportunity for Australia to boost innovation and reallocation, necessary to face the challenges of digitalisation and meet climate change targets in a cost-efficient way’.

The report recommends that the “high” 30 per cent corporate tax rate for big business should be aligned with the 25 per cent levied on smaller companies to remove a barrier for businesses to grow.

Mark Molesworth, Tax Partner at BDO Australia, today commented on the release of the report.

“The differential tax rates certainly have the effect of incentivising behaviour around structures – including ensuring that entities are not connected with one another (where possible) so that their turnovers are not aggregated,” he said.

‘This is exacerbated because of the effect on franking. On occasions, that actually means that companies want to remain in the higher tax rate bracket.

“BDO supports the simplification of the system – aligning the rates at 25% would make the tax system significantly simpler, as well as making Australia more competitive in the fight for globally mobile capital.”

See more of Mark’s comments at https://www.afr.com/policy/tax-and-super/two-tiered-corporate-tax-distorts-business-20210415-p57jh7