About foreign investment
Frequently asked questions
Why does Australia need foreign investment?
Foreign investment supplements Australia’s domestic savings to enable us to expand our economy. Foreign investment fills the gap between what Australia saves and what Australia invests each year. At end of 2019, 102.1 per cent ($463 billion) of Australia’s capital flow was sourced from domestic savings while -2.1 per cent (-$9.5 billion) was sourced from overseas (ABS catalogue 5206.0). Without foreign investment Australia would be unable to build our economy to its full potential and would have less funds available to spend on hospitals, schools, roads and other government services.
How does foreign investment support jobs?
Australia has always used foreign investment to help drive economic growth, and with it, support jobs. For 2016-17 the Australian Bureau of Statistics reported that around one in four businesses in Australia with 200 or more employees has greater than 50 per cent foreign ownership (ABS catalogue 8167.0, 2016-17).
What makes Australia an attractive destination for foreign investment?
Australia attracts a significant amount of foreign investment, partly because foreign investors have confidence that their investments are safe and will grow. Investors regard Australia an excellent place to invest because of its population growth, highly skilled workforce, strategic location, strong record of economic growth and a stable governance and regulatory environment.
How does Australia compare to other countries in attracting foreign investors?
In 2019, Australia was the 14th largest recipient of foreign direct investment (FDI) stock in the world according to the World Investment Report prepared by the United Nations Conference on Trade and Development (UNCTAD). The same report also ranked Australia as the 16th largest source of direct outwards investment stock.
Do foreign investors pay tax?
Taxation revenue is an important way in which foreign investment benefits Australia and Australians. When foreigners invest in Australian companies they are required to pay tax on their profits – just like Australian-owned companies. The Australian Tax Office (ATO) can investigate situations where it suspects that companies – including foreign-owned companies – are trying to avoid paying tax. The Australian Government is working to strengthen international cooperation to address tax avoidance, particularly base erosion and profit shifting, to ensure profits are taxed in the location where the economic activity takes place.
What percentage of Australian businesses are owned by foreign entities?
The overwhelming majority of businesses in Australia remain Australian-owned. Australian Bureau of Statistics data shows that in 2016-17, 97 per cent of all businesses were wholly Australian-owned (ABS catalogue 8167.0, 2016-17).
Do foreign investors send most of their profits abroad?
Many foreign investors choose to re-invest their profits in Australia. Around 55 per cent of the income from foreign direct investment equity over the past five years has been re-invested in Australia.