The Government's 30 per cent withholding tax rate does not signal to foreign investors that Australia is open for business, said the Real Estate Institute of Australia (REIA) president Graham Joyce.
The 30 per cent withholding tax rate for Australian managed funds of non-resident investors will come into effect in July 2007.
REIA has called for this tax to be reduced to 12. 5 per cent.
To remain competitive within the Asia Pacific region, competitive withholding tax rates must be applied to distributions to non-resident investors, Joyce said.
"The headline rate of 30 per cent will disadvantage Australian funds against our major direct competitors, notably Japan, Singapore, Hong Kong and the United States," he said.
On May 10, federal opposition leader Kevin Rudd responded to the Government's budget by announcing Labor would slash Australia's withholding tax in half to 15 per cent.
The proposal was immediately welcomed by the Property Council of Australia and Investment and Financial Services Association (IFSA).
"The proposed reduction in the withholding tax will remove a significant and burdensome administrative requirement for non-resident investors and Australian fund managers," IFSA chief executive Richard Gilbert said.
