Located in the corner of the Asia-Pacific region, Australia is not only one of the largest economies globally but also has a reputation as one of the most appealing destinations for businesses looking to establish and expand their operations. With its highly skilled workforce, strategic location, strong economy, and stable regulatory environment, Australia has consistently been ranked as one of the best countries to conduct business in.
This guide explores why foreign investors and offshore companies seeking to expand overseas should choose Australia as a destination.
Key takeaways
- Australia has a thriving startup ecosystem with numerous accelerator programs, grants, and incentives.
- Setting up a business in Australia is fast and requires minimal capital.
- Its proximity to Asia-Pacific markets and robust infrastructure is ideal for regional expansion.
- Australia’s stable economy offers a safe environment for foreign investors.
1. Research & development tax incentives
International companies consider Australia a prime location for conducting research and development because of the regulatory and economic environment and the Research & Development (R&D) Tax Incentive. This incentive aims to encourage R&D that benefits the Australian economy and provides generous rebates to companies with qualifying R&D activities.
The R&D tax incentive provides a tax rebate, referred to as an “offset” in Australia, for companies conducting eligible R&D activities. To qualify, the R&D activities must be classified as either core R&D activities or supporting R&D activities.
According to section 355.25 of the Income Tax Assessment Act 1997, core eligible R&D activities are defined as experimental activities and include:
- Outcomes that are not predictable with current knowledge but can be discovered through a systematic approach that:
- Uses established scientific principles
- Progresses from hypothesis to experimentation, observation and analysis, and evaluation to reach logical conclusions
- Developing new knowledge that improves materials, products, devices, processes or services
While the exact calculations for the offset can be complex, the following general benefits apply:
- Qualifying R&D entities with an aggregated turnover of less than AUD 20 million are eligible for a refundable offset (cash) equal to their corporate tax rate plus 18.5%.
- Qualifying R&D entities with an aggregated turnover of more than AUD 20 million are eligible for a non-refundable offset (non-cash and income tax credit) equal to their corporate tax rate plus an incremental premium.
2. Foreign investment opportunities
The Australian government actively supports foreign investment and encourages foreign companies and investors to enter sectors where Australia has significant strengths.
Key sectors for foreign investment include:
- Agribusiness and food
- Digital economy and ICT
- Fintech
- Major infrastructure
- Materials science and technology
- Medical science and technology
- Resources and energy
- Tourism infrastructure
For investors in these sectors, Australia offers the Global Talent visa to attract high-value businesses and individuals who can contribute to its economy. Eligible individuals will receive permanent residency and fast-tracked visas for family members.
The Australian government uses targeted incentives to attract new businesses, connect with overseas markets, and create new export opportunities, which generates a positive economic impact. Their long-term stable business environment has built a conducive environment that promotes job creation and increases productivity in Australia’s economy.
3. Startup accelerator programs, grants, and incentives
Australia’s investments in start-ups—including accelerator programs, grants, and incentives—have created a thriving entrepreneurial ecosystem that promotes innovation and economic growth. Through these programmes, start-ups in Australia have:
- Support for product development
- Access to networking opportunities
- Professional services
- Guidance on growth strategies for their business
Another notable initiative is the CSIRO Kick-Start programme, which provides matched funding for startups and small and medium-sized enterprises (SMEs) to access the Commonwealth Scientific and Industrial Research Organisation’s (CSIRO) research expertise. This programme helps start-ups and SMEs develop by enabling them to explore and research new ideas, develop novel or improved products, and test products and processes.
To qualify for the programme, companies are required to:
- Have an Australian Company Number (ACN)
- Be a registered company for less than three years
- Be registered for the goods and service tax (GST)
- Have an annual turnover of less than AUD 1.5 million
More information on available grants and incentives can be found on the Australian government’s business website.
4. Ease of doing business
The standard process of starting a company in Australia takes as little as two days. There are no minimum or maximum capital requirements, where the paid-up capital can be as low as AUD 1.00.
To set up a business in Australia, companies will need to:
- Choose and reserve a company name
- Appoint company officers
- Register with the Business Registration Services (BRS)
- Register for taxes
5. Strategic location
Australia’s location in the Asia-Pacific region puts it in close proximity to some of the world’s largest and fastest-growing economies, including China, India, and ASEAN. Australia also maintains strong partnerships with more mature economies in Europe, Asia, and the Americas through diplomacy and economic cooperation.
More than 70% of Australia’s exports are to the Asia-Pacific region, with China and Japan accounting for half of that. The top ten trading partners in 2023 were China, Japan, Korea, India, the USA, South Korea, Taiwan, Singapore, the UK, Indonesia, and New Zealand.
Australian infrastructure also supports its strategic importance, with:
- Seven major international airports
- Sydney Kingsford Smith Airport
- Melbourne International Airport
- Brisbane International Airport
- Perth International Airport
- Adelaide International Airport
- Cairns International General Airport
- Darwin International Airport
- Ten major ports for international shipping
- Port of Brisbane
- Port of Sydney
- Port of Fremantle
- Port of Melbourne
- Port of Hedland
- Port of Dampier
- Port of Wellington
- Port of Darwin
- Port of Adelaide
- Port of Newcastle
These infrastructure facilities provide strong connections with Asia-Pacific economies, making it an ideal base for expanding business operations throughout the region.
6. Strong economic growth
Australia’s economy has shown consistent growth over the past two decades. GDP rose to approximately 1.7 trillion international dollars in 2023, making it the 12th largest economy globally and the fifth largest per capita. The OECD predicts continued growth of 1.4% in 2024 and 2% in 2025, with long-term estimated annual growth above 2% as far out as 2028.
Australia is renowned for its safe business environment for multinational companies and foreign investors. It protects its economic freedom through its widely respected rule of law and transparent and efficient regulations. Australia ranked 13th in the world in the 2023 Index of Economic Freedom, with an overall score of 74.8. This places it fourth among the 39 countries in the Asia-Pacific region.
7. Free trade agreements
Free Trade Agreements (FTAs) reduce or eliminate barriers to trade goods, services, and investment between participating countries. Australia currently has 18 FTAs in effect, with five more in the works.
These agreements include direct bilateral FTAs with China, India, Japan, Korea, the UK, and the US and multiple bilateral or multilateral FTAs with ASEAN nations.
Australia currently has 18 FTAs in force, which are:
- Multinational
- Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)
- Asia-Pacific
- Pacific Agreement on Closer Economic Relations (PACER) Plus
- Australia – New Zealand (ANZCERTA)
- Regional Comprehensive Economic Partnership (RCEP) (including Australia, Brunei Darussalam, Cambodia, China, Japan, Laos, New Zealand, Singapore, South Korea, Thailand, and Vietnam)
- China – Australia (ChAFTA)
- Australia – Hong Kong (A-HKFTA) and associate Investment Agreement (IA)
- Japan – Australia (JAEPA)
- Korea – Australia (KAFTA)
- ASEAN – Australia – New Zealand (AANZFTA)
- Indonesia – Australia Comprehensive Economic Partnership Agreement (IA-CEPA)
- Thailand – Australia (TAFTA)
- Singapore – Australia (SAFTA)
- Malaysia – Australia (MAFTA)
- South Asia
- Australia-India Economic Cooperation and Trade Agreement (ECTA)
- Americas
- Australia – United States (AUSFTA)
- Australia – Chile (ACIFTA)
- Peru – Australia (PAFTA)
- Europe
- Australia-United Kingdom Free Trade Agreement (A-UKFTA)
FTAs awaiting implementation or under negotiation:
- Trans-Pacific Partnership (TPP)
- Australia – European Union Free Trade Agreement
- Australia – Gulf Cooperation Council (GCC) Free Trade Agreement
- Australia – India Comprehensive Economic Cooperation Agreement (AI-CECA)
- Australia-UAE Comprehensive Economic Partnership Agreement
Conclusion
Australia offers an attractive business environment for foreign investors and companies seeking to expand overseas. With generous R&D incentives and strong infrastructure connecting the Asia-Pacific region, Australia provides a supportive and stable environment for businesses of any size. To fully benefit from the opportunities available, it is recommended to seek expert guidance to facilitate setting up a business and adhere to the regulatory requirements.
How Acclime can help you enter the Australian market
Acclime Australia offers tailored business establishment solutions designed to meet your specific needs. Our team of experts provides specialised support with compliance, regulatory requirements, and leveraging tax incentives to address the challenges outlined in the article.
From initial company registration to navigating R&D tax rebates, Acclime accelerates the business setup process, allowing you to focus confidently on growing your operations.
Disclaimer
This information is of a general nature and is not intended to address the circumstances of any particular individual or entity. We would recommend addressing your specific circumstances as relates to these items with a suitable qualified expert.
