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  Miscellaneous 2007

A GATT compliant tax incentive for Australian businesses?

Source: The Tax Specialist Journal Article

Published Date: 1 Feb 2007

 
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.
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