Foreign companies have long recognized Australia as an attractive place to do business because of its stability, economic strength and laws that protect both business and consumers. Australia does, however, use a complex regulatory framework to govern business and consumer behaviour.
Typically a foreign-owned business may establish operations in Australia
in one of two ways:
- As a branch of a foreign company; or
- A wholly owned subsidiary of a foreign company.
There is no significant relative advantage or disadvantage of either option for Australian tax purposes, however foreign businesses and investors need to understand Australian laws, obligations and reporting requirements before setting up an entity here.
For more information about the benefits of a branch versus a subsidiary, please read our fact sheet Profits from Australian Activities of Foreign-owned Enterprise
Setting up in Australia means that foreign business will need to comply with obligations to ASIC
and the Australian Tax Office
. This may include:
- Structuring your organization to reflect your business strategy
- Understanding and employing corporate secretarial services
- Acquiring resident director services
- Establish an international tax strategy alongside GST, income tax and other corporate taxes
- Understanding transfer pricing
- Filing an Australian tax return
Getting the business structure right at the outset means that foreign businesses can avoid costly changes later.
Once a foreign business is established in Australia, having local support will help the business to manage the myriad layers of tax in Australia.
While the Federal Government is responsible for tax and regulation of business, our state governments are responsible for all employee related matters such as work cover and payroll tax, duties on certain transactions and land tax. A full list of Federal and State revenue offices can be found on our Links page
Ensuring that your business is properly set up from the outset is vital; managing your day-to-day affairs will keep you on the right side of the Australian Tax Office.
For more information about setting up you your business in Australia, please contact us on 02 9957 4033.