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ARTICLE · 06 AUGUST 2025

Productivity Commission Corporate Tax Reform Proposal

Herbert Smith Freehills Kramer LLP
Herbert Smith Freehills Kramer LLP
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Herbert Smith Freehills Kramer LLP

Herbert Smith Freehills Kramer LLP

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The Australian Productivity Commission has released an interim report proposing significant reforms to Australia's corporate tax system, including a reduction in the corporate tax rate to 20% for companies with revenue...

AustraliaTax
Toby Eggleston
Toby Eggleston
Ryan Leslie
Ryan Leslie
Naison Seery
Naison Seery
James Pettigrew
James Pettigrew
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The Australian Productivity Commission has released an interim report proposing significant reforms to Australia's corporate tax system, including a reduction in the corporate tax rate to 20% for companies with revenue below $1 billion and the introduction of a novel 5% "net cashflow tax" (NCT) for all companies, i.e. increasing the tax burden for companies with revenue above $1 billion.

The reforms are intended to be revenue-neutral in the medium term, with modelling suggesting they could increase business investment by $7.4 billion and GDP by $14.6 billion.

While claimed to be designed to boost investment and economic growth, these proposals raise several complex issues that warrant careful consideration. It is also unclear how an additional tax on large corporates encourages meaningful investment, particularly when the report's conclusions are premised on the analysis that Australia's relatively high tax rates deter investment.

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