Australia recorded the eighth highest business tax rate in a 26 country comparison study published today by accounting and consultancy firm UHY Haines Norton.
The high rate puts Australia at a disadvantage in terms of investment and costs for business compared to many neighbouring and competitor countries.
On taxable profits of $US100,000 the Australian government takes 30% in tax, which is around 5% higher than the global average of the countries analysed.
For corporate profits of $US100,000 governments in China and Malaysia take 25% of profits, the US government 24.05% and the UK government just 20% in corporate tax.
CPA Australia's head of business and investment policy, Paul Drum, told SmartCompany Australia's high business tax rate does not augur well for international competitiveness.
"We do have a very high corporate tax rate and it is a significant impediment to investment, setting up businesses in Australia, vis-a-vis other places, particularly corporate headquarters," he says.
"Make no mistake, one of the reasons we now have Australia looking closely at profit shifting is because of our high corporate tax rate. The higher the corporate tax rate is on mobile capital, the more businesses will look at opportunities to reduce their corporate tax burden."
Drum says the business case for reducing the corporate tax rate and increasing employment and productivity is "pretty well known" but the government has investigated a reduction and failed to act.
"We know our competitiveness in a global economy has never been more under challenge than ever before, I don't know if we can wait for Tony Abbott's white paper on tax," he says.
Of the countries included in the study, Japan charges the highest taxes on corporate profits at 43% while at the opposite end of the scale the United Arab Emirates charges no tax on corporate profits, and Ireland just 12.5%.
UHY Haines Norton tax partner Michael Coughtrey said Australia's comparatively high corporate tax rates put businesses at a disadvantage in a global market and can potentially hinder economic growth in Australia.
"The combination of high business taxes, high wage on-costs and the high Aussie dollar is making it increasingly difficult for Australian business to compete internationally, and the government needs to address this," Coughtrey said in a statement.
"Without any action, we're likely to see more businesses based in Australia look at relocating overseas, which will have dire consequences for the economy and employment."