Australia's Future Tax System

Architecture of Australia's tax and transfer system

5.7 OECD comparison of Australia's corporate tax rate

Australia's corporate tax rate is above the OECD average. In 2001, following the reduction in the company tax rate from 36 per cent to 30 per cent, Australia's corporate tax rate was ranked 9th lowest in the OECD, equal to Demark, Iceland and the United Kingdom. The OECD average was 32.5 per cent (Panel A of Chart 5.10). In 2008, the corporate tax rate was 21st lowest, equal with New Zealand and Spain, and above the OECD average of 26.6 per cent (Panel B of Chart 5.10).

Since 2001 the unweighted average corporate tax rate for OECD countries has decreased by around 6 percentage points. This reflects the trend among OECD countries toward lower corporate tax rates driven, in part, by concerns about global capital mobility and economic efficiency.

Chart 5.10: Statutory corporate tax rate — OECD(a)

Panel A: 2001

Chart 5.10: Statutory corporate tax rate - OECD(a) Panel A: 2001

Panel B: 2008

Chart 5.10: Statutory corporate tax rate - OECD(a) Panel B: 2008

  1. Rates are full (national, sub‑national and surcharge) statutory corporate tax rates.

Source: OECD Tax Database.

Australia's corporate tax revenue as a proportion of GDP is the fourth highest in the OECD and significantly higher than the OECD average of 3.7 per cent (Chart 5.11). This largely reflects structural differences in the composition of the incorporated sector in Australia compared with other OECD countries, the imputation system, as well as the strong performance of the Australian corporate sector in recent years.

Chart 5.11: Corporate tax revenue as a proportion of GDP — OECD 2005

Chart 5.11: Corporate tax revenue as a proportion of GDP — OECD 2005

  1. Data for Mexico not available.

Source: OECD (2007a).