Have You Considered Using Australia as Your Global Headquarters?
Australia which is considered to be one of the most liveable countries in the world, has an infrastructure and taxation system which suites any global organisation from using it as its global headquarters.
Australian resident companies can establish an offshore subsidiary or branch which will not be subject to Australia tax if run through a permanent establishment. If you are serious about going global then you should consider establishing your global holding company in Australia.
A foreign corporation controlled by an Australian company or resident is not subject to tax on profits derived from the foreign corporation. The relevant legislation provides that such profits are neither assessable nor exempt. In a world where margins are forever being squeezed savings need to be attained wherever possible. Taxation is a business expense that we all must bear. With any expense associated with running a business enterprise it needs to be reviewed and costs cutting measures introduced in order to maximise our profits.
Australia’s corporate and taxation laws adopt best practice and are considered to be world class. Australia’s legal system is based on the premise to promote and enhance business activities. From an international perspective Australia’s laws encourage Australian domiciled business enterprises to venture out onto the global platform. Our laws are such that incentives are provided to take on business risk. And going global does have its risks.
Incentives which may not be widely known include:-
Research and Development Incentives
Withholding Tax on Interest of 10%
Withholding Tax on dividends of zero to 15%
Exemption from taxation on foreign sourced profits
From a taxation perspective where a controlled foreign corporation derives profits via a permanent establishment as mentioned above such profits will not be assessable nor exempt from Australian Taxation. They will of course be subject to taxation in the country of source [place of controlled foreign corporation]. Dependent upon the tax jurisdiction and whether the taxation based adopted by that country which can be either residency based or territorial based the taxation expense can be legitimately reduced. For example Hong Kong and Singapore are low tax jurisdictions and adopt a territorial taxation system, whereby company tax (which is around 17%) is only payable on profits derived within that country. Income sourced outside the country is exempt from local taxation.
The repatriation of monies from the Australian Global Holding Company will be taxed dependent upon the nature of the repatriation:-
Interest on loan funds will be subject to withholding tax rates of generally 10% [dependent upon DTA]
Dividends will be subject to withholding tax rates of between 0 and 15% [dependent upon DTA]
Royalties will subject to withholding tax rates of between 0 and 15% [dependent upon DTA]
It is in our view appropriate for corporations whether small, medium or large to consider using Australia as your global head office.
As an illustration consider using Australia as your Treasury or Financing arm or as your base for Research and Development Activities.
A typical structure that can be adopted is illustrated as follows:
So if you think your business would benefit from being based in Australia, you can get get incorporated in Australia with the help of companies like Filippo.
