In its submission to the Financial System Inquiry, ANZ said “greater priority” should be given to the financial system’s potential to generate growth by supporting the development of Australian businesses offshore.
“The inquiry should review the impact of taxation on the international competitiveness of Australian financial services,” said the submission.
ANZ pointed out that Asia’s share of global economic activity is projected to rise to 35 per cent in 2030 – and to be over 50 per cent by 2050.
“Asian financial markets will take on financial intermediation roles now largely carried out in Western developed economies … [and] will move to a central place in global flows of finance, with Asian countries competing to promote their cities as financial centres,” said the submission.
Policymakers and regulators should take “greater account” of the economic and competitiveness outcomes of decisions, “in addition to considering system stability and consumer protection”, said ANZ.
Specifically, hurdles to offshore competitiveness – such as excessive capital requirements for trade finance and non-recognition of offshore equity positions – should be changed, said the submission.
“Offshore investments and financial flows should receive competitive taxation treatment to make Australia an attractive base for developing international financial services,” said ANZ
“Dividends from offshore profits should not be subject to full Australian tax as well as being taxed in the location in which the profits were derived,” said the submission.
Australia can be a “constructive partner” for the further development of Asia’s financial system, said ANZ.
