|Submission No. 49||Back to full list of submissions|
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Re: Review of Business Taxation.
Robert Bosch (Australia) Pty Ltd ("Robert Bosch Australia") wishes to present a submission to the Review. The submission concentrates on one important aspect of business taxation. This is the need to maintain a tax concession to assist organisations in their research and development activities and to encourage international investment in Australia.
Robert Bosch Australia.
Robert Bosch Australia is one of the leading automotive component manufacturers in Australia and undertakes substantial research and development activities at its Clayton, Melbourne, facility. The company in Australia has been the traditional provider of technologies and systems to the Australian automotive industry and now has responsibility to support the ASEAN automotive industry within the Bosch Group.
Exports to Europe, North America, Asia and other world markets form an essential part of the companyís operations.
Robert Bosch Australia is an important part of the Robert Bosch Groupís On-Board Electronics division with specific responsibilities for product development and the manufacture of body electronic products.
This project has generated substantial export turnover and created many additional employment opportunities since it commenced in 1996.
The company also recently announced that it will invest a total of $33 million in 1999-2000 in diode manufacturing, of which $11 million is in the high technical field of silicon wafer manufacturing.
As far as the Robert Bosch Group was concerned, this investment was totally "foot loose". Many Bosch subsidiaries in other countries felt that they should be considered. Robert Bosch Australia was the favoured company because of its high level of engineering and manufacturing skills, its strong R&D capabilities built up over the years and the active support provided by the Government in the form of the R&D Tax Concession.
Investment and Research & Development in Australia.
Given the nature of todayís complex world business environment, multinational companies have a wide choice of countries in which to make investments. The decision to make a substantial investment in a particular country is based on many criteria, not least of which is that the project must be able to produce a satisfactory return on investment within a reasonable period.
The R&D tax incentive, of course, contributes towards achieving this aim.
Continuing investment in local research and product development is essential for innovative Australian designed products and systems to compete in export markets. It also prevents product replacement in the local market by overseas designed components. The broad-based tax incentive is a critical factor that attracts overseas companies to undertake research in Australia.
The Robert Bosch Group is well aware that, aided by tax concessions, Australia has been an attractive base for research and development activities. It approved these large investments with the full confidence that the Australian Government would continue to provide this support for the foreseeable future.
As the Review would be aware, these large projects take many months of planning to bring to fruition and companies must take a long-term outlook for their investments.
Tax concessions, as an encouragement to increase R&D expenditure and to attract additional investment to Australia, should be retained under the new tax system. Any switch from tax incentives to direct grants by Government places considerable pressure on Government Agencies to pick winners and to ensure the measurers operate in a certain and simple manner.
Robert Bosch Australia also recommends that the rate of concession be increased so that it provides an after-tax benefit of at least 18-20%. This would send a strong message to international companies, including the Robert Bosch Group, that Australia is a very attractive country in which its research could be undertaken.
The contact person in Robert Bosch Australia is Mr. Denis Anderson, Manager, Government Programs. Telephone 03 9541-5537 Fax 9543-5283, email email@example.com
ANTHONY T. BENDALL
Director of Finance